Madam Speaker, the hon. member for Churchill River is proposing that the federal government should subsidize natural gas expansion projects for remote communities as a way of reducing the cost of living of residents and achieving environmental benefits.
I thank the hon. member for his interest in this very valuable natural resource. Natural gas is a cleaner burning, efficient, cost effective fuel which is why it has become one of Canada's number one natural resources. Canada also has an abundant supply with an estimated available total of between 504 and 617 trillion cubic feet.
It is the stated objective of the Minister of Natural Resources to make Canada into the world's smartest natural resources steward, developer, user and exporter. To become the world's smartest resource developer means in part adopting a considered, practical market oriented approach that balances the needs of all interests. It is this type of approach that is behind the natural gas success story. It is a thriving competitive industry that has followed a course of continuous and sustainable growth.
To understand the present, it is important to look at the past to see how the natural gas industry developed in Canada. Members in the House may remember the energy crisis of the 1970s and the concern for Canadian energy security that followed. In response, a group of off oil programs were designed to expand the use of domestic natural gas in Canada. These programs were phased out in the early 1980s when world crude oil markets stabilized and crude oil prices fell.
In the mid-1980s the crude oil and natural gas markets in Canada were deregulated. For the Canadian natural gas industry this resulted in lower natural gas prices and a surge in natural gas activity. Since then natural gas production, along with associated transmission and distribution infrastructure. has increased at a healthy and in some cases dramatic pace. Expansions to Canada's natural gas infrastructure whether of a local or international dimension have been governed by a combination of economic opportunity, economic viability and technology development.
It is the government's current energy policy not to fund energy megaprojects but to leave it to the competitive market to decide what goes forward and what does not. This is one reason we have difficulty in supporting the hon. member's motion. This policy has not resulted in a stalled natural gas industry, far from it. The result has been some very exciting private sector driven developments, including the expansion of natural gas distribution and production into new previously unserviced regions.
Let us consider the Sable offshore energy project. In late 1999 natural gas resources from off the coast of Nova Scotia will be coming ashore. The onshore maritimes and northeast pipeline will make natural gas available in Nova Scotia and New Brunswick for the first time. Natural gas was first discovered at Sable Island in the 1960s, but it had never been economically viable for production until now, thanks to new drilling technology and new alliances between oil companies and engineering and construction contractors.
I must emphasize that the building of laterals within a province such as the hon. member is suggesting falls under the jurisdiction of the provinces as my hon. friend from Athabasca said. In the member for Churchill River's case it is the province of Saskatchewan.
In these cases expanding the distribution system is the responsibility of provincially regulated local distribution utilities. Provincial regulators set financial tests for new projects. Where a project cannot generate enough revenue to justify its capital cost, the local distribution company will ask potential gas consumers to make financial contributions, as my friend from Athabasca so ably pointed out. They are known as grants in aid of construction to bring the project to the point of economic viability.
If converting to natural gas offers an opportunity for reduced fuel bills, consumers can use a portion of their savings to finance the cost of conversion. From 1995 to 1997 there was an average of 125,000 new residential hookups per year. Of these customer additions, 70,000 were new constructions and 55,000 were conversions from other energy sources. What this means is that 48% of Canadian homes are now gas heated on a normal commercial market driven supply system.
From an energy policy point of view it would not be sensible to depart from the principle of the market must decide where laterals are built. However, for other non-energy policy reasons there may be programs in other departments which seek to achieve economic development or environmental or other goals through the subsidization of laterals. I invite hon. member to investigate those.
In the hon. member's home province of Saskatchewan, for example, the western economic partnership agreement between federal and provincial governments allowed for such funding. Indeed the federal government approached the provincial NDP government to explore whether a portion of the economic partnership agreement funding could be reserved to build laterals in remote areas. The provincial NDP government said no, not the federal government.
Another example of federal funding that was available to help with laterals was the Canada infrastructure works program which the government introduced some five years ago. In the province of Manitoba natural gas laterals to rural communities were identified as a priority and a portion of Manitoba's infrastructure funding was set aside to help build these laterals, not for energy policy reasons but for local economic and community development purposes.
Let me assure the House that the Government of Canada is also very sensitive to the fact that many remote rural areas face high cost energy and general environmental sensitivity. That is why the department has specifically designed alternative and renewable energy programs, as well as energy efficiency in conservation programs, that will help these communities meet their energy needs, lower their cost of living and receive environmental benefits.
Pursuing these initiatives is the most workable, economically viable and environmentally friendly way of meeting the needs of rural and remote areas. Adapting these new technologies could bring these communities savings of $200 million per year, not to mention significant environmental benefits.
For example, some communities are totally dependent upon fuel oil that is shipped at great expense. There are new technology programs in the energy section of NRCan that focus on developing alternative and renewable sources of supply, including bio-energy, small hydro, wind, photovoltaics and active solar energy.
In addition to these technology initiatives the department has developed tools to help communities analyse what kind of supply source would be reasonable and what they would need to pursue it.
Another initiative is the development of community energy systems to improve energy efficiency and allow the better use of waste heat. Under this approach energy use is reduced by integrating conventional energy supply, renewable energy sources, the energy demands of the building, transportation and industrial sectors, and the use of waste heat. The department is also working toward increasing the energy efficiency of buildings. Consider the following example: This year's federal budget allocated $1.6 million over three years for Natural Resources Canada to establish a program with the Federation of Canadian Municipalities to identify opportunities for energy efficiency retrofits in municipal buildings. Under this initiative, municipalities expect to reduce greenhouse gas emissions by 30% to 40% and save $108 million to $175 million.
Initiatives like this are the best options for delivering a lower cost of living and environmental benefits to rural and remote communities. They are the wave of the future for rural and remote areas. I urge the hon. member for Churchill River to investigate all of them thoroughly.