Natural Resources Committee on Oct. 4th, 2023

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

I listen with respect. I find that heckling, insulting and trying to intimidate witnesses is not becoming, so I'd ask Mrs. Stubbs and her party to stop this so we can continue.

I'd like to ask if I can get my time—

[The Chair, Liberal, George Chahal]

Mr. Angus, I've paused your time.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'd like my time back so I could just ask some simple questions.

[The Chair, Liberal, George Chahal]

I've paused your time.

I will ask all members to please allow the member to ask the question and for the individual providing testimony to be able to provide their testimony, as a courtesy. Let's all please work together and give everybody the time and respect they've given to be here today.

Thank you.

Mr. Angus, the floor is yours.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'll continue.

I'm very sorry that this happened to you.

I think the issue I'm asking about is this. I just spoke with people who are in the clean energy business who told me that, when they're looking for investment, the first question they're being asked now is what jurisdiction they're in, because they are not going to get money in a jurisdiction where they can't trust the politics. Is that what your members are hearing?

[Fernando Melo]

Our members are hearing that it is very difficult to acquire capital if you cannot build or cannot acquire permits. My members are really hopeful that we will be able to get back to this and get ready to go in February, but yes, my members are often asked where they're going to be deploying capital. It's really important that we have the regulatory and political will to allow us to build.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I asked this question because it is so important when we're looking at an investment of $110 billion in the United States. We're looking at Texas, where the solar and wind capacity has just exploded.

When you have certainty, investors will invest. What we've been told is that, if the jurisdiction right now is Alberta, they're not willing to invest, because they don't know what uncertainty is coming.

Do we have other jurisdictions in Canada that can pick up the slack? We can't afford to lose this investment to the United States.

[Fernando Melo]

I can say that many provinces and system operators are issuing calls for power across this country or are preparing that. I can think of Ontario that has some. Saskatchewan has several, and the Province of Quebec is beginning its process as well. We have a very favourable integrated resource plan coming out of Manitoba that is looking at wind as a possible way to build up their grid and continue to grow.

[Charlie Angus, NDP, Timmins—James Bay, ON]

In Texas again, which is even further right than some of my Conservative colleagues, there are 800,000 clean energy jobs. They got through a brutal heat wave with the air conditioners running full out because they had wind and solar capacity, whereas Danielle Smith rented a truck to drive around Ottawa, saying that the power has gone out. That's not a good way to attract investment. I don't think so. I'm not a Conservative. That's how they think they get it.

I want to ask you.... Texas lowered the cost of electricity for consumers by $11 billion last year with the switch to wind and solar. Are your members able to provide lower-cost energy for Canadians looking to get renewables on the grid?

[Fernando Melo]

If we look at the 2023 Lazard cost of energy report, which primarily studies the U.S. but goes to North America, we see that firmed-up renewable electricity was the lowest-cost source of electricity. That is even lower than combined-cycle natural gas, or peakers, in terms of division.

It will take all forms of energy to get us across the line, but it is showing that when you put renewables, we reduce the prices.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm running out of time.

I'm fascinated by the prevailing wage conditions, which are something the New Democrats fought for to make sure that we're getting good union jobs. Your members support the prevailing wage conditions so that we are actually putting good jobs in the field. We noticed that we lost 45,000 in the oil operations because they've gone to automation. We need to replace those jobs.

Do your members support this move for prevailing wage conditions and apprenticeship training?

[Fernando Melo]

We are incredibly supportive of those prevailing wages. We are simply asking for guidance for each jurisdiction, as we know there are some complexities in the way it has worked throughout Alberta and Saskatchewan, particularly, and in the way those labour agreements do structure.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Very quickly, on indigenous...what do we need to do?

[Fernando Melo]

We need to make sure that indigenous entities, be they communities, companies or individuals, can access an investment tax credit at an equal rate as their taxable partners. It is unfair to list otherwise.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Melo.

Thank you, Mr. Angus.

It's over to Mr. Dreeshen for five minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much, Mr. Chair.

To Mr. Melo, you spoke about the low cost for solar and wind. I suppose this is a good time for me to mention that, whatever it is we use, we should be talking about the energy requirements from the first shovel you use to dig something up to the last shovel you use to cover it up. That is the real cost. It's not just how much energy you can get out of something that you're going to buy at Costco. I think that's the first part.

The other thing is that last week ATCO was here, and I asked them how much money they put aside for decommissioning solar and wind projects once they've outlived their usefulness. This is the question that Albertans were talking to their governments about when they said, “There had better be a moratorium on this, because as landowners, we have no idea what the consequences are going to be, or the costs to the provincial government, the municipalities or the landowners.” That is the reason for the pause that we have at this point in time. It seems to be a political football, however, around here.

The first question that I would ask you, Mr. Melo, is what numbers your industry gives those provinces, municipalities and landowners so that they know the cost of reclamation.

[Fernando Melo]

I'd be more than happy to speak to the cost of reclamation, sir. We actually have a memorandum of understanding with the RMA, or the Rural Municipalities of Alberta. We are working quite closely with them on this issue and have been for years. I'm very excited to say that we are working on that.

One of the great things about ours is that we build our land lease agreement with landowners. You have to understand that renewable power projects are built with the consent of landowners, and part of that is reclamation and retirement. I can't speak to the individual cost built in.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much. I would just ask you to speak to the farmers' advocate from Alberta, because this same discussion has come into play but they do not believe that the relationships that you have are strong enough to protect them. Again, this is part of the reason why some of this is being discussed. Hopefully, in five months we're going to have that all sorted out, so everybody can have faith in that regard.

Mr. Tertzakian, some of the things I've been talking about for a long time were mentioned in your testimony. In order to have a level playing field, it's important that industry be aware of and able to discuss the impediments that are faced by Canadian investors compared to their American counterparts.

You spoke of some of those. The U.S. doesn't have a carbon tax. The only significant pipeline, Keystone XL, was cancelled on day one. That's hardly a measure of good faith between our two nations. When we talk about the Trudeau-Biden relationship, it only goes one way.

For the second part, when we talk about currency, as the price of oil went up, we could see something happening with our dollar. Obviously we're out of that game. The U.S. leaders see a business case for LNG exports around the world. We don't. The U.S. global power ranking makes it incumbent on the U.S. to maintain good relationships with India and other neighbours. These are the sorts of things that we have to consider.

Mrs. Stubbs mentioned earlier that, if there is a way for you to address those issues, get them to our amazing clerk so that we have them. It's not just so that we can take a look at them. These are necessary items for us to put into this report. We can draw from them. We might not be able to ask you the questions here and to get the responses, but it is so important for us to be able to do that because that is how a real report is going to come about.

Mr. Tertzakian, could you discuss a very simple item, which is the difference between investment tax credits and production tax credits? Many of us believe that's the way the U.S. is covering some of the projects.

[Peter Tertzakian]

Simplistically, a production tax credit is when every time you produce a unit of something, you get a payment. For a kilowatt of solar power from a solar panel, the United States government will give you a payment of, say, seven cents for a kilowatt as it's produced.

An investment tax credit means that you first have to make the investment—put your money up front—and then get your money back after, by offsetting the taxes you have to pay on your profitability. It's a more complicated way of thinking about it. It doesn't necessarily mean that it's less financially lucrative, but it's more complicated to model, especially when you have the layering, chaining and clashing policies all across the energy system and, on top of that, the uncertainty and volatility in the carbon markets, which are opaque.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Tertzakian. I'm sorry to cut you off. We've gone over time. Thank you.

We'll move over to Mr. Sorbara for five minutes.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

Good afternoon, everyone. Thank you for your individual presentations. They're very informative.

When we think about the energy and electricity sector, traditionally, three things come to mind. You have your generation, your transmission and your distribution. We can now add a fourth pillar, which is storage.

When we look at the Canadian market—and I'll focus on Ontario, which is my home province—and the dynamics going on, it's very fascinating. I'll give a shout-out to the Independent Electricity System Operator because it has a great website to look at in terms of how power is produced, the supply of it and then the demand. Looking at the IESO website, we see the important role that nuclear, wind, hydro, solar, gas and biofuel play in Ontario, with nuclear obviously being a very significant and stable baseload generator.

On that tangent, George and I have interacted on many occasions. I had the pleasure of visiting the Bruce Power plants last summer in Kincardine and just recently I was out to the OPG refurbishments in Darlington. There's some fascinating stuff going on.

George, the question I have is in terms of the supply chain and looking at the continuum. How is Canada uniquely positioned within the nuclear industry, both at home and globally?

[George Christidis]

Thank you for that question.

We have a very strong supply chain. There's the fact that the refurbishment programs—let's just start there—of OPG and Bruce Power are on time and on budget. Some of those projects are actually ahead of schedule, and they went through a pandemic that way, just to stress that.

That is the foundational piece in the Canadian nuclear space that has really lit up the CANDU supply chain. This is a foundational piece for the SMR opportunities, the small modular reactor opportunities, as well. That skilled labour, that capability, that knowledge is foundational, and it has global attention. At some of those international meetings we've attended, other countries want to know how Canada did it. How does OPG do it? How does Bruce Power do it? They want to know explicitly about the refurbishment projects, for example. I think that's the foundational piece: the interest again in CANDU so countries like Romania feel confident things can be delivered.

With this moving forward, I think just the reinforcement of the role of nuclear in a consistent way—whether it's green bond definitions, ITCs that mirror up with the U.S. or the inclusion at COP, for example, of an explicit statement that nuclear is part of the menu of clean energy technologies, a menu that makes sense for different jurisdictions to assemble their technologies—is key.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, George.

We look at the landscape out there. We have leadership from Cameco. We have leadership from Brookfield. There are many Canadian companies in the production of isotopes, for example, for medical uses. That needs to be highlighted.

I do want to get this on the record. I think there was prior mention in some testimony with regard to the ITCs. There are two ITCs that are applicable to the electrical sector. There's a 15% one and there's also a 30% one. Depending on which entity is undertaking the activity, there's an applicable one for 15%, which I believe would be for Crown corporations, and then a 30% one if there are SMRs. For example, Hitachi has made the announcement in Darlington. I believe that would be applicable. I could be corrected, but my understanding is that it would be applicable to that.

I'm not sure how much time I have, but I'll move to Mr. Powell.

Electricity Canada is at 84% in terms of having a clean electrical supply today in Canada, which is very high. I listened to your commentary and your recommendations. I want to go over the blues on that when I have a chance. What is your view in terms of how big a competitive advantage Canada's current electrical supply is in being clean and green?

[Michael Powell]

I think it's a big one. That's one of the reasons you see companies locate in Ontario and Quebec. It's not something we can take for granted, though. As the system grows, we have to make sure we keep the system as clean as it is and cleaner, but that it remains reliable and it remains affordable as well. There's a balance to all these things.