Evidence of meeting #78 for Foreign Affairs and International Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was europe.
A recording is available from Parliament.
6:15 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
I would just say that Mr. Wilkinson did interfere in the market in that way to allow for these 300,000 incremental barrels of oil equivalent a day in order to respond in March of 2022 to the European energy crisis.
Thank you.
6:15 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Mr. Chong, that's over four minutes. Thank you.
We now go to Mr. Oliphant for four minutes.
6:15 p.m.
Liberal
Rob Oliphant Liberal Don Valley West, ON
Thank you, Mr. Chair.
I want to thank the witnesses for helping us with this study early on. I also want to thank the analysts for the notes for this meeting. I found them very helpful.
I'm putting my old accountant hat on for today. It's the second time in a week. It's scary. I want to start by saying that I'm proud of Canada as an energy producer. I'm equally proud and convinced that we can become a green country with a lower carbon footprint while we produce energy for the world. I am pro pipeline, against other forms of transportation. I am pro helping Ukraine beat Russia in the current conflict. I am pro helping Europe with their energy problem.
All of that being said, I want to follow up on Mr. Garon's questions around the business case. I am actually a profoundly free market person. When he talked about the Spanish company Repsol making a decision to not continue, announcing that exporting LNG from the terminal to Europe was not a viable project, it made me look at the whole issue of the business cases that are involved here.
My question is this: What do you believe the business case is for private sector expansion of energy, given that our goals as a society are also to have a greener future?
6:15 p.m.
Professor, Faculty of Environmental and Urban Change, York University, As an Individual
That's a complicated question.
Part of the challenge, of course, is that governments are still intervening very aggressively in support of fossil fuels and subsidizing them in multiple different directions. I think there remain embedded policy contradictions in terms of where we're going.
We're not necessarily leaving that to the marketplace. We are still intervening quite significantly in favour of fossil fuels. The estimates on the extent of subsidization of the fossil fuels sector in Canada vary. I see figures of anywhere from $3 billion or $4 billion up to $18 billion a year, depending on how you count. Some people would count Trans Mountain on top of that.
To come back to the LNG aspect, there have been persistent questions about the economic rationale. Certainly, going east doesn't seem to work, very simply, and going west is trickier.
6:15 p.m.
Liberal
Rob Oliphant Liberal Don Valley West, ON
On that, I'm really struggling with the business case. What was also mentioned were the profits that energy companies have been reaping, particularly since the higher and inflated prices. Is that profit is being being used for the good of Canada? Are they investing in infrastructure? I believe they should be engaged in investing in their own infrastructure. Where are the profit levels? Are they making money? Are we subsidizing? Why would we want to subsidize further when the markets may not actually be there?
6:15 p.m.
Professor, Faculty of Environmental and Urban Change, York University, As an Individual
I think these are very good questions.
The fossil fuel sector, at the moment, is very profitable. There are very good questions about the targeting of government support and subsidies and where that is taking us and what sorts of pathways it may be embedding.
6:20 p.m.
Manager, Energy Security Forum, Canadian Global Affairs Institute
Could I jump in here as well?
I feel as though the treatment of calculations of subsidies doesn't take into account the fact that Canada's energy industry, particularly oil and gas, operates under a tax system that is fundamentally different from what applies to most businesses in Canada, particularly when it comes to the royalty taxation that provinces impose on the energy industry. That taxation is a fairly substantial portion of provincial incomes, especially in Alberta, British Columbia, Saskatchewan, and Newfoundland and Labrador.
Royalties—
6:20 p.m.
Liberal
The Chair Liberal Ali Ehsassi
I'm afraid you're out of time, Mr. Calnan.
Welcome, Mr. Trudel.
You may go ahead for two and a half minutes.
6:20 p.m.
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
Thank you, Mr. Chair.
[Technical difficulty—Editor] I don't share any of the Liberal member's optimism or agree with his assessment of Canada's energy policy, and I probably wouldn't agree the position of my Conservative friends on the subject either.
According to an article in Le Devoir, Canada's fossil fuel subsidies totalled $38 billion U.S. last year. That was in 2022. According to an International Monetary Fund study, the bulk of that amount is “due to undercharging for global warming and local air pollution.”
Even though demand for fossil fuels is expected to peak in the next decade, Canada keeps making gargantuan investments in yesterday's energy.
How do you explain those investments, which, I repeat, are huge?
In 2022, the top five oil companies raked in $200 billion in profits.
How do you account for the fact that Canada continues to invest this many billions of dollars in an industry of the past?
6:20 p.m.
Professor, Faculty of Environmental and Urban Change, York University, As an Individual
I think that's a good question.
My political scientist answer, in part, is that they are institutionally embedded incumbents. They have very close relationships with some provincial governments as well.
I think the underlying question is very valid, particularly in the context of commitments around climate change and energy transition. The continued subsidization of the fossil fuel sector is one that raises an awful lot of questions. There are debates about how you do this and how you account for that.
One also has to keep in mind that visible subsidies are only part of this. As we've been reminded in Alberta, there is also the question of accumulated liabilities over abandoned wells and things like that, which have to be taken into account as well. It's unclear how that's going to be covered, other than, ultimately, through the taxpayers of Alberta.
Therefore, we have to keep a very broad perspective on the different forms of subsidization and support that may occur in a sector. The ones that may be most visible may not be the most important.
6:20 p.m.
Liberal
October 25th, 2023 / 6:20 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
I'm going to reiterate that as my colleague Mr. Oliphant said, I feel like the math doesn't add up. We don't have the infrastructure in place. We simply don't. We can't overlook the fact that attempts to get that infrastructure in place have cost Albertans a lot. Jason Kenney wasted $1.5 billion on a bet that the Keystone XL pipeline would go through. We're also seeing the industry laying off workers. Right now, Suncor is laying off 1,500 workers in our sector, despite the fact that they have massive profits and continue to increase their outputs. Absolutely, if we had the energy east project and the capacity to do this, there would be a real argument for it.
So far today, I've heard nothing that has changed my mind. We are living in a climate crisis. We have laws in this country, like UNDRIP. We have provincial jurisdictions. We are a federated system, so I think this whole conversation—which was supposed to be about how to help Ukraine, despite the fact that our discussions have had very little to do with Ukraine today—is problematic, because Canada isn't in a position right now to help Ukraine. We can look back at why we should have been in a different position than we are, but....
Mr. Winfield, is there any rationale for us to be thinking Canadian energy is a solution to helping Ukraine at this point? What am I missing?
6:20 p.m.
Professor, Faculty of Environmental and Urban Change, York University, As an Individual
The question of how to help Ukraine is a complicated and broad one. At this stage of the game, I would suggest that the energy dimension.... The numbers we're talking about represent very small portions of total global energy supply in terms of oil, for example.
Probably where Canada can help Ukraine the most is in other spheres—diplomatic and otherwise—as I am increasingly concerned that we're not paying enough attention to what is happening in Ukraine and the situation on the ground there because of developments in other parts of the world, in other places.
That is a very broad answer.
I would not argue that the energy dimension is the most central thing in terms of supporting Ukraine at this stage.
6:25 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Thank you, Professor Winfield.
For the final round, each member is provided four minutes, with the exception of Mr. Trudel and Madam McPherson, who have two minutes each.
We start off with MP Epp. You have four minutes.
6:25 p.m.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Thank you, Mr. Chair.
Thank you to the witnesses for being here—
6:25 p.m.
Liberal
Rob Oliphant Liberal Don Valley West, ON
We were going to 6:30. Did the committee already agree to go longer?
6:25 p.m.
Liberal
The Chair Liberal Ali Ehsassi
This was going to take 10 minutes, but because there were all sorts of delays—
6:25 p.m.
NDP
6:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
I think it's scheduled to finish at 6:30, and we should finish on schedule. There are four minutes.