Fisheries Committee on Oct. 27th, 2011

[The Chair, Conservative, Rodney Weston]

I call this meeting to order.

To the witnesses, thank you for meeting with us today and taking time out of your busy schedules to appear before this committee. You're pretty well all familiar, I believe, with the workings of the committee. We have certain timeframes that we try to stay as close to as possible in order to allow everyone to get both questions and answers in. We generally allow 10 minutes for an opening presentation.

I see that you have a slide deck. I assume all members have copies.

Mr. Stringer, perhaps you could start by introducing your delegation. Please proceed.

[Kevin Stringer, Assistant Deputy Minister, Program Policy, Department of Fisheries and Oceans]

Thank you very much.

The slide deck was actually presented on Tuesday by my colleagues. We have it today by way of background. I thought I would say a few words so that we don't start just by asking for your comments and questions. I will introduce my colleagues and say a couple of words to follow up from that slide deck. But we can certainly work from it today. We' be happy to do that.

I do want to say thank you very much for the invitation to be here today to further discuss the topic of closed containment. My name is Kevin Stringer. I'm the assistant deputy minister for program policy at the Department of Fisheries and Oceans. I have general responsibility for operational policy for the department's major programs, including aquaculture.

I have with me three colleagues. Dr. Jay Parsons is director of the aquaculture science branch within the ecosystems and oceans science sector in the department. He is also the immediate past president of the World Aquaculture Society.

Mr. Stephen Stephen is director of the biotechnology and aquatic animal health science branch within the same science sector at DFO.

As well, Mr. Alistair Struthers is the team leader for sector strategies within our aquaculture management directorate. He's one of three authors of the feasibility study on closed containment.

I gather from my colleagues that you had a useful and informative introductory session on Tuesday. I am told that you asked some interesting questions, and hopefully you were able to gain a greater understanding of closed containment, DFO's involvement thus far, and an insight into the challenges of potentially applying these technologies.

As you know--just for a bit of context--aquaculture is important in Canada. It generates a landed value now of $400 million and nearly 6,000 jobs in British Columbia, and another $350 million and nearly 5,000 jobs on the east coast. There are important developments in central and inland Canada as well.

In total, aquaculture has an economic impact of $2.1 billion for the Canadian economy. We're committed to ensure that this growing industry is managed and regulated in an environmentally responsible way.

DFO recognizes the importance of continuous innovation that can provide further improvements to current practices, sustainability, economics and social acceptability of all elements of aquaculture. In this light, closed containment may be one such production approach.

As my colleagues would have said on Tuesday, closed containment represents a broad spectrum of technologies or practices, starting with water-based pens and culminating with land-based, recirculating systems. As we move along this spectrum, the systems offer perhaps greater control over the growing environment, but seemingly, at this time, at the cost of greater complexity, technical challenges, and financial investment. Many, including our department, are seeking to better understand these challenges and to address them.

As I believe my colleagues touched upon, closed-containment systems are not currently being used anywhere in the world for the commercial production of Atlantic salmon. But these systems are being used for the production of Atlantic salmon juveniles or for high-value species in niche markets.

There are a number of barriers we can speak to during the Q and A session and discussion.

We note that there are a number of crucial assumptions in our studies and other studies. They're very sensitive to changing conditions, and we can speak to them later on, as well.

There's also interest in assessment. We have an interest in assessing the relative environmental impacts of the different types of containment systems, and we are continuing to work on that.

In conclusion, like you, we are engaged in this, if further work does need to be pursued. The work of your committee in examining closed containment for salmon aquaculture is well timed, in our view, and is important in that regard. We'll follow your work with great interest and look forward to your conclusions.

That said, we're happy to share our experiences and knowledge with the committee at this time.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Stringer.

We'll go to Mr. Hayes.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you, Mr. Chair, and welcome to our guests.

Your colleagues last week gave a great presentation. They were very informative. I knew absolutely nothing about aquaculture before that time. I know significantly more now, but still not nearly enough. I know a little bit about sea lamprey control, because in Sault Ste. Marie last week, during my constituency week, I visited the Department of Fisheries and Oceans and had a very good tour. I'll have some nice pictures for you folks down the road very soon.

It's my understanding that in terms of return on equity, there are only two types that have shown a positive return. One is the net pen and the other is a recirculating aquaculture system, as it's referred to.

It's my understanding that there are different types of RAS systems. I wonder if you could elaborate on the difference between the AquaOptima RAS technology and the RAS system evaluated in the feasibility study of closed containment options for B.C. I'm trying to get an understanding of the differences between RAS systems, most specifically in terms of capital costs, and in terms of the different returns on investment, or returns on equity. What differences would have an impact?

[Kevin Stringer]

Let me start, while giving my colleague Alistair fair warning that I'm going to ask him to talk on some of the specifics.

I'll start with some sensitivities and assumptions. You talked about what could affect economic viability. We made a number of assumptions. We pointed this out in the executive summary, and the conclusion, and the body of the paper. There are a number of inputs to this that would have a significant effect on bottom-line economic viability. I point to three of them. These affect both closed containment and non-closed containment. I'll start with the price of salmon.

If the price of salmon when we did the study had been what it is today, we likely would have found, even by back-of-the envelope calculations, that the RAS system was not economically viable. When the study was done, the price of salmon was in the range of $2.60. It's now in the range of $2.30. It's gone down significantly. Whether that's because the Chileans have come back into the system because the U.S. market is in tougher shape, or because of the exchange rate, is uncertain. There are a number of factors. But the price of salmon is enormously important. We found in our study that the systems currently being used are economically viable. The RAS system was marginally viable.

Rearing densities are important, those being the number of fish in the pen. We don't have demonstration projects to know how many fish you can stock. So we made some assumptions about how many fish you can put into a pen. We assumed that it would be significantly more than what's in an open-net pen, because otherwise the economics wouldn't be there.

Capital costs are enormous, and a slight change makes a significant difference. You're right to suggest there are serious sensitivities—the price of salmon, rearing densities, capital costs, and exchange rates. As for the specific technical differences between the different RAS-type systems, Alistair can fill you in.

[Alistair Struthers, Team Leader, Sector Strategies, Aquaculture Policy, Department of Fisheries and Oceans]

Essentially they're different brands, AquaOptima and the system we used in our financial feasibility study. We had to start somewhere, so we chose the system based on the recommendations of a design consultant we had. There are various types and brands. AquaOptima is one, and there's another company in B.C. that produces large-scale research systems and components. As to the differences in capital costs, though, I think they would be negligible.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Are there any more systems currently being developed? Is this an emerging technology?

[Alistair Struthers]

It is emerging. There are probably four or five companies around the world that are developing recirculating technology. A number of them are based in Europe.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

I understand there are negative environmental impacts associated with the aquaculture industry. In closed containment, I expect one of those is the fecal waste that is generated. Can you describe the different technologies that exist for dealing with waste from closed containment systems? Do we need to do more work in this area to improve the technology? Is that the only environmental concern with closed containment systems, or are there others?

[Kevin Stringer]

Again, I'll start.

An area of work that's been identified as useful to do is to have a life-cycle analysis of environmental impacts of open-net pen and closed containment systems. It may be a bit like comparing apples and oranges, but when you're talking about a land-based system, the issue of waste management is a challenge. There are opportunities and there are experiments, or demonstration projects, that are seeking to use the waste as compost in fertilizer and for those types of things. I'm not sure how feasible that is, but that is one possibility that people are looking at.

You're right: waste management is a challenge. It is a challenge in open-net pens as well, but it's a new challenge and a particular challenge for closed containment.

Power use is another issue. One challenge, both in terms of costs and environmental impacts, is that these systems need an enormous amount of power. Challenge number one is that you have to be close to and able to gain access to a power grid, but challenge number two is with GHG emissions and the amount of power you are drawing down for these systems.

That said, we know that the open-net pen processes are not without challenges as well. But power use, greenhouse gases, waste management, resource depletion for concrete structures and the like are all issues. Work is being done, and we're trying to seek some of that information, on a life-cycle analysis. You're right that we need to better understand the environmental impacts of closed containment, in particular. We already have a sense of the challenges around open-net systems.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

That's good for me.

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Hayes.

Mr. Donnelly.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Thank you, Mr. Chair.

Again, welcome to our guests. Thank you for appearing as a delegation in front of us. We appreciate the information.

Before I ask my main question—and I have a colleague who will also ask a question—I just want to clarify something.

Mr. Stringer, you mentioned that a life-cycle analysis is being done. Is the department leading that study?

[Kevin Stringer]

Part of what we do is to see what research is being done elsewhere. In fact, if you look at our CSA session a couple of years ago, which Jay can speak to, it was largely a review of research that's being done elsewhere. But it is something that we're interested in. We do have a study that's looking at different types of environmental analyses, including this type, but we have not sponsored something on a life-cycle approach with respect to closed containment.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Okay.

Perhaps you could keep this committee informed of the information you find out.

My question is regarding ISAV, the infectious salmon anemia virus. It's been an issue on the east coast and we're now concerned about it on the west coast, potentially.

With these closed containment systems, could you describe the differences involved? For instance, a re-circulating system has to address the issue of salmon disease, or disease versus, for example, parasites, sea lice, and other issues like feces, etc.

[Kevin Stringer]

I'll say a couple of things on this. You've seen the minister's letter announcing that we are doing further testing—and we can speak to that if you wish.

In terms of the potential effect of closed containment, I would say two things. First, it obviously has an effect on distancing the aquaculture-based fish from the broader environment. That's not 100% in the system, as I believe you know. But we also believe that we have a safe environment now, with proper protocols in place. For instance, under our B.C. regulatory system, we require all facilities to have health management plans, to have reporting to CFIA and to ourselves on disease outbreaks, and to have biosecurity protocols in place. While the closed containment technology does not currently exist in a way that can be operated, in our view, we believe that we have an adequate system in place. That said, we take the findings very seriously, and we are doing further testing to see what bears out from them.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

I'll let my colleague ask his question.

[The Chair, Conservative, Rodney Weston]

Mr. Cleary.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you, Mr. Donnelly.

Mr. Chair, my question is probably a follow-on to the question that Mr. Hayes asked. Mr. Hayes asked about the potential impacts on the environment of a closed containment facility. What I'm looking for is a list of potential impacts on wild fish from the fish raised in closed containment.

This is a two-part question. The second part is this. I'm from Newfoundland and Labrador and part of the Atlantic caucus of the New Democrats. We had a presentation the other day from the Atlantic Salmon Federation, coincidentally. One of the stats they mentioned in their presentation was that wherever there's an aquaculture industry, there's a decline in the wild salmon population by 50%. This is the number that the Atlantic Salmon Federation gave us. Would that be the case with a closed containment facility?

So the first part of my first question is about the potential negative impacts on wild salmon populations, and the second part is whether the stat I mentioned would also hold true for a closed containment facility's impact on wild populations?

[Kevin Stringer]

I've heard that stat but haven't seen it, so I can't comment on whether it would be accurate or not. But we can took a look at it and I'll be happy to get back to you on our views with respect to that.

Regarding closed containment, intuitively you would think that if there's not the interactions with the wild fish in the outside environment, then there's less likely to be that effect on wild fish. But that's why you want to look at it from a life-cycle perspective, because there are other environmental impacts. That's what I'd say on that.

With respect to the specific number, we'd have to take a look at that number to see what the impact is. We do think it is manageable to have wild fish and aquaculture fish in the same area. It takes appropriate management. It takes a management plan for the area, which involves fallowing, fish health plans, strategies around escapes, and strategies around fish coming into the pen. The regulatory regime needs to speak to those things, but closed containment may address some of those things as well.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Cleary.

Mr. Sopuck.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Thank you.

In terms of closed containment aquaculture, it looks like the economic and technical issues are very daunting. What are the conceivable technologies out there? I'm asking you to peer into the future, the dim future. What conceivable technologies are out there might make closed containment aquaculture systems feasible and that compare roughly with net-pen aquaculture? I'm just asking you to speculate on what might be coming.

[Kevin Stringer]

Okay.

Generally, when these things are developed, there are three phases. When I refer to new technologies for commercial use, there are three phases.

The first phase is getting the idea and doing the research to understand what the possibilities are, and coming up with ideas about what might work. We've largely gone through that, I think. There's more work to do, but in terms of closed containment....

The next phase is demonstration projects. I think that's the phase we're at, the phase that we're entering into, namely to demonstrate these things on a commercial scale. What generally has happened, and not just with this technology but with others—though we'll see if that's the case—is that as they get introduced, you do demonstrations projects. And there are often public funds that go into this, because it's not commercially viable yet. So demonstration projects go into it. We see which technologies work, by trying a number of different ones. At this point that we're at, we make our best scientific-inspired guess about what's going to work effectively. And generally what has happened—and we've seen it in things like carbon capture and storage and other technologies—is that the price or cost starts high and gets driven down with practice. And as it becomes more accepted in industry, there's an economy of scale to be able to use it. We don't know if that will happen in this case.

In terms of new bright ideas coming out, I'm going to throw it to Jay—or anybody—to suggest the next generation of things that we're hearing about. I think at this point we're at this generation, and still testing out some of the ideas.

[Dr. Jay Parsons, Director, Aquaculture Science Branch, Department of Fisheries and Oceans]

I agree with Mr. Stringer's comments on the different phases.

The only further thing I would say in terms of the demonstration scale is that it's not only testing the technology around closed containment, but it's also looking at some of the biological factors related to growing the fish in these systems, such as the growth rates, the food conversion ratios, how the fish respond to higher densities, and what some of the challenges might be in growing the fish in these closed containment systems with respect to health management of the fish. Certainly, I think that's where the added work needs to be done in the future in looking at the overall viability of these systems, not only from an economic or an environmental perspective but also from a biological perspective.