Foreign Affairs Committee on Oct. 25th, 2023

[Randy Hoback, Conservative, Prince Albert, SK]

I'm looking more at energy requirements. I just used the slang “cold”.

[Joe Calnan]

Certainly there could be major issues when it comes to the supply of oil to Europe if something like this happened, so yes, there would be issues around the world.

However, as Iran primarily exports its oil to China, I think China would be the most heavily impacted right off the bat.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

If we look at.... I come from Saskatchewan, and nuclear energy—

[The Chair, Liberal, Ali Ehsassi]

I'm sorry, Mr. Hoback. It's been five minutes. Thank you.

We now go to MP Chatel. You have five minutes.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

At the onset of last winter, we were very worried about the Europeans and whether they would be able to heat their homes. They went through a tough time. It's fair to say, the Europeans are resilient. A year later, we are again having to deal with this energy security challenge, as my fellow member pointed out. Winter's arrival is still cause for concern.

Could you talk about how the situation in Europe currently compares with the situation last year? Have countries in Europe managed to find other energy sources?

[Joe Calnan]

I'll take that question.

Yes, Europe in fact succeeded in finding alternative sources for natural gas and oil, and to an equal extent, I suppose, coal, although coal isn't so important as a component of Europe's energy system anymore. On a wide basis, coal was phased out as a major energy source in Europe. It is still a significant energy source, and we saw Europe begin to draw on the coal markets of Kazakhstan and South Africa last year.

In terms of the oil and natural gas situation, Europe has become much more heavily dependent on the Middle East for its supply of liquefied natural gas especially, and for oil. Most countries in the European Union—there are still a few countries that are holdouts on this front—do not receive any natural gas or oil through pipelines or overseas shipments from Russia. There is still a substantial role for Russian LNG, however, in Europe's energy imports.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

I was also asking about Europe's energy security and independence. What progress do you see on that front, Mr. Winfield?

[Dr. Mark Winfield]

For Europe, I think it's important to separate the relatively short-term response to get through last winter and this coming winter, which has particularly put a very strong emphasis on accessing liquefied natural gas wherever they can get their hands on it. They are quite successful at that. In the longer term, the Europeans are quite clear about their emphasis on renewables and the energy efficiency side. I think they're very sensitive to the question of substituting one geopolitically risky energy source in Russia for another somewhere else, particularly in the Middle East.

It's very important to look at the European approach in the immediate crisis management that has taken place around supplies, and the longer-term picture of where things are going with their energy transition. In Europe's case, the convergence between decarbonization and energy security is very strong.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

With the energy transition in Europe, how do you think Canada can best position itself as an economic partner in Europe's energy strategy?

[Dr. Mark Winfield]

There are multiple dimensions to that.

We're in a conversation about what that looks like. The Europeans have expressed interest in hydrogen, for example, although I think there are some questions about the economics of that. We've seen Europeans also being very interested in critical minerals. We saw that very much with Ms. von der Leyen's visit.

In my opening, I stated there were complications, particularly relative to other global suppliers. We need to think about how much we want to be put in the role of a primary resource commodity provider versus more value-added types of contributions on the European side.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

[Dr. Mark Winfield]

We have to be conscious of trade-offs domestically as well.

[Sophie Chatel, Liberal, Pontiac, QC]

I agree with you. I think we need both. We can't just let our natural resources leave the country. We have to process them here as well.

[The Chair, Liberal, Ali Ehsassi]

Thank you, MP Chatel.

We now go to MP Garon. You have five minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

Thank you to the two witnesses for being with us today.

Mr. Winfield, you said that Europe was interested in LNG in the very short term and that LNG wasn't necessarily a long-term solution for the European Union's energy security.

We've also heard from witnesses that Canada isn't yet equipped with the basic infrastructure required to supply the Europeans with the LNG that would improve their energy security in the short term.

I'm from Quebec, so I know that Quebec is an expert when it comes to hydroelectricity, renewable energy, wind energy and so on.

Solar and wind energy facilities in Ukraine have been destroyed. Is oil and gas all Canada has to offer to support the energy transition? Is that all we can offer as a country, or can we contribute to the long-term transition?

[Dr. Mark Winfield]

I think we have much more to offer, particularly in Quebec, for example, where there is very long-established expertise around energy storage. In particular, battery technologies are one area of note, as you also noted.

We have also been very successful in increasingly large-scale integration of intermittent renewables and also in the management and balancing of those, particularly in Quebec's experience with hydroelectric storage infrastructure, so there is expertise in multiple dimensions that Canada can contribute to this conversation. Indeed, those may turn out to be the more value-added components on the engineering and system management components, as opposed to just being a commodity resource provider in that process.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

You said that, with Europe speeding up its energy transition, it wasn't a stable and secure market for Canadian LNG in the long term.

In fact, Repsol, the Spanish energy company that owns the Saint John LNG receiving and regasification terminal, announced that exporting LNG from the terminal to Europe was not a viable project. Canada, meanwhile, is expanding the Trans Mountain pipeline, costing taxpayers a whopping $30 billion.

Is Canada using the situation in Europe to justify infrastructure projects to transport fossil fuel—projects that will lead to further losses and turn out to be bad investments for Canada's economy and businesses in the long run?

[Dr. Mark Winfield]

I think there's an interesting conversation around this, for sure.

We certainly have heard lots of voices pushing for increasing commodity exports, particularly fossil fuels. As you highlighted with regard to natural gas, that's a challenge. We don't have any eastward export capacity. It actually goes down through the United States to the Gulf Coast, if it's going that way.

In theory, we will have natural gas export capacity on the west coast with the Coastal GasLink and various B.C. LNG projects. The challenges there, though, are significant around the economics. The expectation is that the infrastructure will serve Asian markets more than European markets. The B.C. LNG projects are very carbon-intensive; they are from fracked natural gas, as opposed to simple sweet gas.

As we've seen, there are also very significant divisions among the affected indigenous communities around those projects. This is a complicated—

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

Sorry, I'm going to use the half a minute I have left to ask the other witness a quick question.

Mr. Calnan, you talked about the U.S. sanctions against Iran, which exports much of its oil to China. Iran is a member of the Organization of the Petroleum Exporting Countries, or OPEC, which controls the bulk of global supply.

Are you saying that only Canada, with its major pipeline projects, could supply what Iran wasn't able to export to China and that the other members of OPEC wouldn't be willing to make up the shortfall? I'm curious to hear your thoughts on that.

[The Chair, Liberal, Ali Ehsassi]

Could I ask you to respond in less than 15 seconds, please?

[Joe Calnan]

I'd say that in this circumstance, it would certainly be Saudi Arabia that would make up a shortfall, because they have a significant amount of spare capacity and they've always taken their role as a balancer seriously.

However, I also need to push back on the idea that OPEC controls most of the world's oil production. It does not. OPEC controls around 40% of the world oil production. A large percentage—

[The Chair, Liberal, Ali Ehsassi]

I'm afraid I'm going to have to cut you off, Mr. Calnan.

For the next question, we go to MP McPherson for five minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much, Mr. Chair.

Thank you to the witnesses for being with us today.

I was quite interested, Mr. Winfield, in some of the things you were saying with regard to our obligations concerning climate change. If we were to use natural gas, it is very carbon intensive, and it doesn't necessarily adhere to UNDRIP and some of the other legislation that we have in place in this country. It would require an awful lot in terms of carbon capture technology to go forward.

Does Canada have that carbon capture technology at this point?

[Dr. Mark Winfield]

That's a matter of some debate. Deployed on the scale that might be necessary, the short answer would be no. In theory, there are investments being made in that space. The challenge with LNG especially, though, is that you have carbon emissions coming from multiple places. Part of it, at the moment, is that it looks like we're going to be using fossil fuels to do the liquefaction. You might be able to do CCUS there if the geology is right in the location in British Columbia.

The other problem, though, with the B.C. gas is that they rely very heavily on fracked natural gas, and the problem there is that it's is very hard to deal with through CCUS, because what you're largely dealing with is fugitive emissions like leaks from wells and leaks from the fracking process, and there is quite a lot of concern about just how much methane, especially, is released as a result of the development of those kinds of gas reserves.

We're not talking about a situation of just drilling a well into a sweet gas reserve. This is much more complicated. It's much more carbon-intensive in the extraction process itself, as well as in the processing.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I assume it's extraordinarily expensive to develop these new technologies.

Who, in your opinion, should be paying for the development of these technologies and the development of these resources, this carbon capture storage?