Natural Resources Committee on May 29th, 2014

[The Chair, Conservative, Leon Benoit]

Thank you very much, Deputy Minister.

Thank you, Mr. Leef.

We go now to Mr. Calkins for up to five minutes, please.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Well, thank you very much, Chair.

Thank you very much for staying behind for another hour to answer some questions.

The first question I have for you is in regards to the National Energy Board and the amounts in here for it. At this committee I've expressed frustration in the past at how long some of the approvals have taken, for example, the line 9 reversal, obviously involving the public consultation process and so on for things that seem to be in-house matters. Notwithstanding that, Bill C-38 was passed by Parliament back in 2012, which made some changes to the National Energy Board review process. I'm surprised to see that the National Energy Board still, to date, has a fairly substantial budgetary allocation. I'm just wondering about the implications or the impact of passing Bill C-38. It streamlined the regulatory process and some of the things that the National Energy Board is responsible for, but it doesn't seem to have an impact overall on their budget. Could you explain to me why that is?

[Serge Dupont]

There are a number of factors that will affect the budgetary resources of the National Energy Board, as with any other organization. The estimated expenditures this year have gone up to $73.3 million relative to $62.4 million before, largely because the National Energy Board this year is basically relocating and expending one-time moneys to refit offices and go into a new facility.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

You're talking about the Calgary office?

[Serge Dupont]

That's right. That's essentially going to be repaid over the next 10 years.

Meanwhile, as indicated in the budget, yes, there is, for a major pipeline project for example, an 18-month period of time legislated for their review and a decision. That includes the time that the government itself has to make a decision upon receiving the report of the National Energy Board. That basically means that the National Energy Board now has 15 months to conduct a review of a major pipeline project. They have now, as we know, recently completed one major project. Another one is already in the pipeline, so to speak, as Trans Mountain and Energy East may be expected to file soon. Because you have these large projects coming at the board at the same time, there were additional resources provided in budget 2014 for the board to be able not only to meet that demand, but also to meet it within the timelines. The budget provided $28 million over two years. That's not a cost to taxpayers because those moneys are going to be fully recovered from the industry. Nonetheless, the way the accounting works, it does have to be recorded in the main estimates as an expenditure. The revenues subsequently come in, so basically the net is zero to the taxpayer, but for transparency's sake, it is still provided in the estimates for information for parliamentarians.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Okay, so what assurances can you give to this committee to tell us based on what's in the queue insofar as regulatory requirements for the National Energy Board are concerned? Will it have the resources? I know they've been allocated here, as you've just said. Can you assure this committee that the allocation of those resources will be substantive enough to ensure that the regulatory process is not held up by a lack of government funding?

[Serge Dupont]

The best person to answer the question would be the chair of the National Energy Board but I could assure the committee, or assure you through the chair, that certainly every conversation that I have had with the National Energy Board would suggest to me that the chair would be very comfortable in saying that they have the resources they need with the amounts provided in budget 2014. Again, it will be cost recovered to fulfill their mandate and to fulfill the mandate within the timelines now established in law.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Can you just please talk to me a little bit about, or explain to this committee, the budgetary allocation amounts for NRCan's science and technology internship program. What budget amount is allocated for the internship program and what might we expect to see upcoming from that internship program?

[Serge Dupont]

The internship program receives $600,000 annually. It provides wage assistance to support work experience opportunities with external organizations for as many as 60 interns annually. So we essentially provide....

We have a very small program. One to two people administer it. About $600,000 may be provided to employers in order to effectively subsidize wages for up to 60 interns a year. It's a relatively modest program, but for the most part it has appeared to work well providing young Canadians who have graduated from university with a first work experience, a first hand in the resource sector.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Are there any rubrics in place to follow up with these interns afterwards, and what metrics do you have to gauge the success of the program? I'm sure there must have been something established in that regard.

[The Chair, Conservative, Leon Benoit]

A very brief answer, please.

[Serge Dupont]

It will be very brief, Mr. Chair. I will have to come back to the committee on that to give a more specific answer.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Mr. Calkins.

Before we go to our next questioner, who is Ms. Moore, followed by Mr. Regan, I'd like to propose to the committee that after Ms. Moore and Mr. Regan ask their questions, we go to the votes on the main estimates and then allow for a little bit of time to go in camera to discuss future business.

Following our meeting we have a meeting of the procedure and House affairs committee on the main estimates, and I understand that the Speaker may be one of the witnesses there.

The next two questioners would be Conservatives anyway. I'm just asking for approval from the committee to end this part of our meeting with Ms. Moore and Mr. Regan.

[Some hon. members]

Agreed.

[The Chair, Conservative, Leon Benoit]

Thank you very much. We don't want to hold—

[Geoff Regan, Liberal, Halifax West, NS]

[Inaudible] tough questions.

[The Chair, Conservative, Leon Benoit]

Yes, Mr. Regan, of course they're tough questions from the government side.

Go ahead, please, Ms. Moore, for up to five minutes.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

I would also like to ask two questions about two decreases in the budget. One is $31.2 million for the ecoENERGY for biofuels program. The other decrease is $25 million for the appropriated grant to Canada Foundation for Sustainable Development Technology the next generation biofuels fund.

With those two decreases, one can see that anything related to biofuels has been decreased.

Can you tell me what the motivation was behind the department's decision to move away from biofuels to some extent?

[Serge Dupont]

As the minister stated earlier, the ecoENERGY program for biofuels is a multi-year program.

Previously, the intent regarding the program, given its design and its structure, was to decrease financial support over time. Thus, eligible companies were given a grant for their biofuel production over a certain period of time. That grant was decreased over time. And the idea was that by the end of the program, the companies would be able to continue producing and supplying biofuels according to market conditions. The program structure itself dictated that funds would decrease over time.

Based on the overall program and current projections, we will have spent approximately 1 billion dollars in grants on these various biofuel producers.

With respect to SDTC's next gen biofuels fund, the decrease in funding reflects the fact that from year to year we also have to consider the amount of interest that is been expressed on the part of the private sector. This program is administered by a third party, the SDTC, which must absolutely find a private sector partner who is willing to go forward with a valid project that meets the program criteria.

To date, market conditions and interest on the part of investors are such that these projects have not materialized as we would have wished. In the end, it is the lack of interest on the part of investors and innovative companies that have lead to the SDTC spending less than had been forecast.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

In terms of the program that is to receive less money over time, do you feel that the funds that have been invested to date have been enough to meet the targeted goals? Were the outcomes lower than those goals or were the program goals surpassed?

Could you expand on this? Could you give us more details on those goals and how they were reached?

Generally speaking, I would like to know if the money was well invested in terms of outcomes?

[Serge Dupont]

That is an excellent question because we always make sure that we measure program results.

To determine the effectiveness of a program, a distinction must be made between ethanol and biodiesel. When it comes to ethanol, we have signed 14 agreements, which is 94% of the target. We subsidize the production of about 2 million litres per year. From that point of view, we are satisfied with the scale of production. Furthermore, analyses lead us to believe that this production will remain cost effective beyond the program. These producers will be able to continue to provide ethanol after the end of the program, because they will have established their position on the market.

As for biodiesel, the situation is more difficult. We have signed eight agreements, which represent 61% of the target. Once again, the fact that this is a partnership that we concluded with producers must be taken into account, as well as the fact that there is a partner on the other side.

Market conditions for biodiesel have been more difficult. Even with the subsidy that we have granted to biodiesel producers, they have not always succeeded in producing the quantity they expected to, nor have they been able to complete their projects. They have not reached the level at which we were ready to support them. Replacing diesel with biodiesel has not met expectations. As for ethanol, we just about broke even.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

Thank you, Ms. Moore.

Finally, we go to Mr. Regan for up to five minutes, to end the questioning of the departmental officials.

Go ahead, please, Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chair.

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

The main estimates provide for an increase of $20.9 million in funding for “the stakeholder engagement and outreach campaign to build prosperity for Canada”.

Can you please explain what this stakeholder engagement and outreach campaign to build prosperity for Canada is all about, and why is it so hard to find any information about this campaign?

[Serge Dupont]

I'm quite happy to provide the information.

I mentioned earlier that the government announced last year that $30 million would be allocated over a period of two years to do two things. One is to advertise internationally, again, about the fact that Canada is a responsible supplier of energy, to ensure that in major capitals in the world they understand our commitment to not only be a supplier of energy, but also be a responsible supplier of energy, and energy know-how and technology and competencies.

That includes advertising over the period, in a range of $750,000, as I mentioned.

There are also amounts to be paid for outreach. Those are different activities that may be funded, which may, for example, be promoted by our missions abroad— conferences, seminars, workshops, and so forth. We organize those to sensitize decision-makers around the capacities of our energy sector broadly.

There are also, obviously, some salaries and internal services, to the tune of $2.75 million within that $30-million envelope.

[Geoff Regan, Liberal, Halifax West, NS]

Can you get back to the committee with a detailed breakdown of that money rather than try to go through it all right now?