Economic Relationship between Canada and the United States Committee on March 18th, 2021

[Sherry Romanado, Liberal, Longueuil—Charles-LeMoyne, QC]

Would it be safe to say that, for citizens in remote communities, not being able to get health care during a pandemic could be a reality?

[Dan Kelly]

It could very well be.

We faced this during the rail strikes. There was a shortage of propane, and there were times during those periods, whether it was the blockade or the strike, when the availability of propane was getting quite dire and there were some situations where people were running on the bottom end.

A situation like the closure of Line 5, when approximately 50% of the supply comes from there, would have a drastic impact. There are many facilities that are operating in rural areas all across eastern Canada—Ontario, Quebec and the Atlantic provinces—that may run into some great difficulties without the supply of propane.

[Sherry Romanado, Liberal, Longueuil—Charles-LeMoyne, QC]

Thank you very much, Mr. Kelly.

I'll cede the rest of my time to MP Bendayan. Thank you.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, dear colleague.

I would also like to thank all the witnesses we've heard from today.

I have a question for Prof. Pineau, an expert from the École des hautes études commerciales de Montréal, the HEC, an institution that is the pride of the people of the riding of Outremont. I would also like to take this opportunity to thank him for being here. Like him, I would like to stress the importance of energy integration between Canada and the United States.

I want to make sure I understand your point, Prof. Pineau. The Prime Minister recently raised with President Biden the importance of harmonizing the rules surrounding electric vehicles.

I will now come back to Line 5. In your opinion, the decision to close Line 5 could create a precedent that would jeopardize the development of power lines between Canada and the United States. When we think of Quebec's enormous potential for supplying renewable electricity in the northeastern United States, this is a concern.

Since my time is limited, I'll now give you the floor so that you can elaborate on your reasoning.

[Prof. Pierre-Olivier Pineau]

If politicians build an election campaign and win an election on the premise that an energy infrastructure is going to be shut down, then you could imagine some mobilization taking place. Unfortunately, we know that it's possible to mobilize certain segments of voters against certain infrastructure. This has been the case in New Hampshire and Maine, where there have been protests against power lines to bring Canadian hydroelectricity to the United States. Major developments have blocked energy projects that were not only good for the United States but also for Canada.

So it's very important to counter this trend. Otherwise, political mobilizations against projects that may otherwise have significant economic and environmental benefits could become more important than the regulatory and environmental analyses that projects undergo. If we give the impression that we can mobilize against such projects, that can lead to “not in my backyard” syndrome and very significant problems. When we look at the importance of electric power transmission for the decarbonization of our country and the United States in the future, we see that we are absolutely going to need more interconnections and power lines between our countries. While this is very positive, there may also be people who are against these power lines. So if we leave too much room for political games in these decisions, it could complicate the energy transition enormously.

So it's really the rigour and the overall framework for decision-making that needs to be addressed. This case clearly demonstrates how we could go off track and lean toward a political decision, when the majority of economic, energy and even environmental indications lead us to conclude that this is an infrastructure that has its place in the overall energy infrastructure of our two countries.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

[The Chair, Liberal, Raj Saini]

Thank you, Ms. Bendayan.

Now we have Monsieur Savard-Tremblay.

You have six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Good afternoon. I'd like to thank all of our witnesses.

Mr. Pineau, on the whole, I agree with you that, in the short term, the lesser evil probably lies in maintaining Line 5, while waiting for a real energy transition, of course. When I say “while waiting,” I don't mean it in a passive way. We have to work on it.

Are the facilities currently in good condition, or are they in an antiquated state?

[Prof. Pierre-Olivier Pineau]

I'm not an expert in the operation of pipelines or in assessing their condition. What I do understand about this file is that there have been some challenges and that they have been taken into consideration. Plans are in place to address the issues raised, and a new project can take over to ensure that this pipeline doesn't pose any particular danger to Americans, Michigan, the Great Lakes or Canada. While no means of transportation is safe, pipelines are a safe means of transportation.

Of course, you may need to make an energy transition, but you don't do it by shutting down pipelines, because there are already pipelines closing. That's a position I've held for a very long time. Ironically, the eventual closure of Line 5 could restart the Portland-Montreal pipeline, which runs from Maine to Montreal and is virtually unused. So just because a pipeline is closed one day doesn't mean there is an energy transition, because other options are available, such as tankers, old pipelines, rail and so on.

So environmentalists who think closing pipelines is a step towards energy transition are mistaken, in my opinion. It's a detour from the problem, which is really a problem of overconsumption of petroleum products in North America and Canada. That's the problem that needs to be addressed, not the pipelines themselves, which are merely a symptom of our current situation and consumption.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

In other words, it should be done the other way around: They will be closed when they're no longer in use.

[Prof. Pierre-Olivier Pineau]

Absolutely.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That sums up your comments.

Earlier, you talked about some form of cooperation. Did I understand you correctly that you were talking about a neutral entity that could look at most of these projects?

The current dispute is between Enbridge and the Governor of Michigan, who are opposing their respective safety data. It seems that no third party has really looked at this issue, with a view to deciding the issue or determining who is right.

[Prof. Pierre-Olivier Pineau]

Actually, it's completely out of the ordinary for a state governor to be involved in a decision like this.

The United States and Canada should have institutions. That way, premiers and governors would not have to give their opinions on the issue.

Governments should give direction on energy policy, but they should not make decisions about whether to build specific infrastructure. This isn't a policy decision, and governments should not make decisions in this regard.

Of course governments should drive energy policy, but not the very practical investment choices.

It's obvious that there is institutional dysfunction right now. In fact, in my opinion, just talking about it in a House of Commons committee indicates that there has been a slippage in the way institutions operate.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

What you're saying makes sense to me. You mentioned the Governor of Michigan's stance, but let's not forget the company's perspective and the interests of the people directly affected. In this case, no one seems to be truly disinterested, and there is a lack of an institution that would have the task of deciding a case like this.

Have you had a chance to imagine what this type of institution might look like? For example, Quebec has the BAPE, the Bureau d'audiences publiques sur l'environnement, which provides a report. It may not be a perfect body, but it's a form of consultation with all the people affected.

Is this a model to follow?

[Prof. Pierre-Olivier Pineau]

The BAPE makes recommendations that the government is under no obligation to comply with. So the direct answer is no, I don’t have any suggestions in that regard right now.

If you look at the decisions made by the states and by Canadian provinces, we see that the North American energy sector is extremely fragmented. Each province wants to take advantage of the situation and each state defends its own interests. Fragmentation is a challenge in terms of more comprehensive and rational planning for energy infrastructure. These are pipeline issues, but also transmission issues.

That's why it's very important to make sure that we build a much more integrated platform for collaboration and planning, because the challenges of the energy transition are going to be such that we won't be able to fight anymore with a multiplicity of agencies or local assessments. We need to build continental institutions to solve these problems. I know it's going to be very difficult, because the political conditions don't necessarily exist for the creation of new institutions. However, dialogue between the countries is very important. We have to find neutral ground on which to make these decisions.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

[The Chair, Liberal, Raj Saini]

For the final six minutes, we'll go to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

I will put this out for any of the witnesses. The Gordie Howe bridge, which is being built here between Windsor and Detroit, has with it community benefits to offset the negative impacts of hosting a border development. Regardless of the fact that it has some improvements in terms of the current congestion in our corridor of around 40,000 vehicles per day pre-COVID—it's less than that right now, but still in the tens of thousands—there is still an impact on these new areas, be it Sandwich Town, which I represent, or over in the United States in Delray, where there are actual community benefits to offset it.

I've researched this on the Enbridge site. There are a lot of great arguments in terms of the economic and environmental consequences of closing Line 5 like this, but is anybody aware of any of the community benefits that Enbridge is providing to offset some of the criticisms for this being thrust upon people with regard to Enbridge operations currently and the future one with regard to tunnelling? I'm not sure if anybody.... I think it's a problem. You have a lot of witnesses with a lot of reasons for things, but I mean, we're here for a reason. I'm a little surprised by that and, as well, Enbridge hasn't reached out to me. That's the first thing I do; I look to ameliorate the issues that are at hand.

Maybe I will go to you, Mr. Pineau, with regard to your testimony on that. I just want to make sure that I'm clear on this. The United States has a clear path in their origins of state and federal responsibilities that is well marked in terms of why they have even united. Similar to that, in Canada, we have our Confederation process. Cellphone towers require access rights. Fibre optics require access rights. Spectrum auction is something that is in the public domain for our cellphones and that we sell off. We also have transmission lines.

Are you suggesting that there should be no role for the public or elected officials with regard to those things that are actually under the jurisdiction of the public and are public assets? Maybe you can clarify that. I go under that impression, at least for myself, because I believe that citizens have a role and responsibility to be involved and to be included in their democracy in terms of the decision of using a public space for operations, even if it's to their benefit. It's an open debate in terms of how that goes forward, especially when you look at aboriginal rights as well.

[Prof. Pierre-Olivier Pineau]

Absolutely, and I'm definitely not saying that we should not hear from the public. Definitely, public hearings should be organized so that different voices can be heard, but we should also realize that a single project should not be blocked by one community that basically doesn't want that project over its territory. It's a very difficult arbitrage to make and a difficult balance to find between these local interests and the global interests.

If every community is given the right to veto a large-scale infrastructure project, then forget about everything. Forget about pipelines, forget about transmission lines and forget about highways. We have to find a balance. I'm not suggesting that we should not listen to the concerns of these individual communities, but there's a balance to be found.

If we look at the challenges for the energy transition that most of us, at least, want to see happening, then we know that we will need some linear infrastructure to bring the energy from one place to another place. Some people won't like these infrastructures, but we will still need them as a society. We need to find a better balance. If we bring too much politics into it, I think it's a problem. For the policy directions, of course, governments are needed.

[Brian Masse, NDP, Windsor West, ON]

Yes, and that's the whole point of where I'm at, with a bit of concern as to the approach as this goes forward. That's why we created community benefits for hosting a new border crossing, for asking thousands of trucks to come into the community, along with vehicles with emissions and impacts on the community. We actually include them as part of.... Actually, the United States does this much more effectively than Canada does, because they have percentages for construction and for inclusion of minority populations, and it's legislated into law. There are offsets for those different things. The one we're getting for the Gordie Howe bridge is very minuscule, but at least it's something. It's $10 million on each side. That's to actually acknowledge that being the host of these things comes with a consequence.

I understand where you're coming from, but I'm a little taken aback by this. Somebody has to make a decision at some point in time.

If I could pivot really quickly to Ms. Borden, with regard to the propane issue, I think it's one that doesn't get as much attention right now. In terms of Line 5, aside from shortages and so forth, what would be your alternative model? For some of the oil and gas industry and so forth that I'm familiar with, it's to put that on trucks and so forth. Is it a similar experience that you would have? Would it require massive investments and actual vehicles at this point in time? Also, and that's the other thing, where do the vehicles come from at this point in time, in terms of production during COVID? We're even short on auto manufacturing right now because of components and so forth.

[Nancy Borden]

I like to say to my employees that we don't drive around cotton balls; we transport dangerous goods. The idea of just switching Line 5 into vehicles or train cars is just not possible by May. To have people up and running, multiple extra trucks are needed.

We're Canadian. We're going to get the propane in. If we have a customer who's going to be cold, we are going to get the propane there—don't get me wrong—but the way they are going about this is just completely ineffectual.

What will happen is that in our attempt.... Say, over in B.C., we are going to do our best to support our brothers and sisters across this country. We will always do our best to get the propane to the customers, but the pressure that it puts on and creates throughout the system is absolutely unsustainable. It's not really fair to a very highly skilled group of individuals, highly trained in manufactured parts and in how we transport this product. It's just not doable right away by May.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Masse. Thank you very much.

I'd really like to thank all the witnesses today for a very productive discussion.

Ms. Borden, Monsieur Pineau, Mr. Kelly, Mr. Vammen, Mr. Mundy, Mr. Goodman, thank you so much for spending time with us and contributing your thoughts and opinions to this very important study, not only for Canada but also for the United States. Thank you very much again.

Members, we will suspend for a couple of moments, just so we can sign in to the in camera portion for the next 20 minutes. Thank you, everyone.

[Proceedings continue in camera]