Environment Committee on Oct. 27th, 2009

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Just say yes or no.

[Eli Turk]

In a broad manner, yes.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Michael Martin, who is the chief negotiator and the ambassador for climate change for Canada, last week shared Canada's briefing package, as Mr. McGuinty mentioned, for Copenhagen. He reported that Canada will replace 90% of electricity needs, without emitting greenhouse gases, by 2020 and that we will meet that commitment by fuel-switching away from coal.

Can you advise the committee if Alberta has committed to shut down its thermoelectric plants by 2020?

[Eli Turk]

The target that you're talking about is a very aggressive one. There's no doubt about it.

As I pointed out in my opening comments, there is some great hydro potential right across the country. I don't think the--

[Linda Duncan, NDP, Edmonton Strathcona, AB]

No, no, I asked if Alberta is planning to shut down its coal-fired plants by 2020.

[Eli Turk]

Again, to get back to the target, it isn't province by province. It's a national target. So if there's activity in a certain particular area, that will help with the overall target.

To simply answer your question, no, I'm not aware of the Alberta government saying they're going to close coal plants.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

Mr. Martin also testified that Canada will implement, through CEPA, greenhouse gas emission standards for coal-fired plants to promote the deployment of CCS. Has your association been consulted on those regulations?

[Dr. Rick Hyndman]

Specifically on that, no.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

So you have not been consulted yet on these imminent regulations.

[Eli Turk]

We've had broad discussions, and I'm sure when the draft regulations are available we'll be fully consulted.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

You spoke in your brief about fairness and competitiveness and the cycle of capital stock turnover. I'm well aware of those arguments, because I sat with your association for 10 years on the Canada-wide standard for coal-fired plants and the Alberta negotiations on regulations for mercury.

The argument that was continuously put forward by your association was that we can't possibly regulate mercury, because it's not affordable and the technologies are not provable. Yet in the end, the Government of Alberta, to their full credit, actually issued a regulation, which will mean that all the coal-fired power plants in Alberta will be capturing mercury this January.

Do you think it's quite conceivable that the same scenario will play out that we discovered on mercury, that in fact technologies for the control of carbon may be far more affordable than forecast?

[Eli Turk]

Having formerly been a vice-president of business development for a technology firm, I have some firm views in terms of what's real technology and what isn't. As you point out, with the mercury, there was a certain time lag in terms of when it was commercially available. We actually hosted an international seminar on mercury technologies to take a look at where things were and to try to move it forward. We think we were pretty aggressive on that.

At the end of the day, is the technology real or not? I think it's really when you ask a supplier to supply technology and to guarantee its performance at a certain cost and take a penalty if it doesn't perform, and then it's real. If it's not, then it's not real; it's a prototype.

So there could very well be new technologies that are disruptive that do help with the situation. I don't discount that at all.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I'm not sure that answered my question, but I'll move on to Dr. Hyndman.

It's wonderful to see you, Dr. Hyndman. It's nice to have an Albertan at the witness table.

How much has your sector invested in R and D for pollution control and reclamation in the last year?

[Dr. Rick Hyndman]

I don't carry those numbers around, but I know that for environmental spending, depending upon how you define it, the number is quite big when you include all the things the industry does. I don't know what it is for pure R and D, but it's not a huge amount, obviously.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Dr. Hyndman, do you think the investment in R and D by the oil and gas sector and tar sands sector is equivalent to the R and D investment to expand production in the sector?

[Dr. Rick Hyndman]

Keep in mind that the companies are always trying to do things better. Most of the emissions come from burning energy, which is needed to produce the oil and gas. You can save money by improving your efficiency, so that kind of stuff is going on all the time.

On the production side, a lot of the R and D happens in the service companies on the drilling techniques and that sort of thing, so it's not very clear exactly what that is because it's spread out. We rely on technologies developed elsewhere in the world.

While it's not a Canadian company, Exxon Mobil just sank $700 million to $900 million into developing liquid fuels from algae, so that kind of basic R and D is going on. But I'm afraid I don't know how much is actually happening from the Canadian companies.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Do you think, to be equitable to all the sectors, if the Government of Canada is going to invest taxpayers' dollars to help develop and deploy cleaner technologies, it would make sense for it to contribute dollars to both the renewable sector and the fossil fuels sector?

[Dr. Rick Hyndman]

Sure.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

So you agree it would be appropriate for the government to step up to the plate and actually invest the dollars that were promised in the renewable sector.

[Dr. Rick Hyndman]

The government and society have to pour much more money and investment into all kinds of energy supply technology. As I said in my opening remarks, it probably makes sense for Canada to focus on things that are particular to Canadian circumstances. We can't compete with what's going on with solar in the U.S. On wind, I don't know; some of the other countries are further ahead.

There may be things you can do that are particularly relevant to Canada so we can make our contribution to the global effort. We need to keep in mind our relative size and importance in all of this. We need huge investments globally to move this stuff forward if we're going to transform the energy system as required.

[The Chair, Conservative, James Bezan]

Your time has expired.

Mr. Warawa, can you finish us off on the seven-minute round?

[Mark Warawa, Conservative, Langley, BC]

Thank you, Chair.

Thank you to both witnesses. I really enjoyed your testimony. It was very informative.

I just came back from Copenhagen, and over the weekend was at an environmental conference put on by Globe International—it's just weeks away from 192 countries, thousands of people, going to Copenhagen looking for a new international agreement on climate change—and I was very proud of our aggressive targets, a 20% reduction by 2020 and a harmonized approach with the United States.

It was my first time in Copenhagen. I always like to look ahead to see what they're doing. I flew through the night on Thursday, arrived there Friday morning, and Friday spent much of the day on a ship looking at the harbour and the turbines and seeing what Copenhagen was doing. They have a coal-fired generating plant right there in the city, too, also with turbines, so they realize there are some ways that they can clean up.

But I was struck by some of the efficiencies and their lifestyle. It's quite different from here in North America. To buy a vehicle, it's a 180% tax. Let's say you buy a $30,000 vehicle here in Canada. In Copenhagen, you would pay out of pocket maybe $80,000 to $85,000 because of that 180% tax. The sales tax is 25%, and fuel is $2.50 a litre Canadian. It's very expensive.

The targets that are being presented in Bill C-311 are European targets, yet the targets that Canada has set are aggressive considering our circumstances. So I really appreciated your testimony.

Taking this North American continental approach to the clean energy dialogue ongoing with the United States—the Untied States was represented at the conference, too, by the way—to me seems the logical way. In fact, the previous group of witnesses we had were scientists—this was a week ago, Tuesday of last week—and they acknowledged also that it was a good idea to have a continental approach, that Canada, and the United States, and Mexico have similar targets going into the international negotiations in Copenhagen and following.

So my question to you is how important is it that we have a continental approach? If we didn't, if we went the route of Bill C-311 and broke away from a continental approach and broke into a European target, what would that mean to your industries?

[Dr. Rick Hyndman]

Thank you very much for that question.

I would repeat, as I said earlier, that the 20% reduction from 2006 by 2020 is seriously more onerous and aggressive than the U.S. target of a similar amount because of our underlying trend in emissions. So the effort we have to make is not from history, it's from where we would otherwise be. So our business as usual down to that target is much bigger in proportionate terms than is a comparable target for the U.S. To go even further away implies that you're willing to just shovel money over the border somehow to make up for that kind of difference.

The idea of a comparable policy to that of the U.S. is important. Exactly how we align with the U.S., though, is an important question, in my mind. One thing that economists have pointed out is that all the benefits, in terms of getting efficient reductions in both countries, come from having the same carbon price, if we're talking about carbon pricing policy. There are no extra benefits that come from cross-border credit trading. If we put in the same price here as there, then we will get the same kinds of reductions going on in both countries and there's no necessity of having credits flow back and forth across the border. If you link up two countries in a cap and trade system, with very different targets of business as usual, then you set up a situation where you generate a steady-stream cashflow from the more onerous targets to the less onerous one. That's my concern about being fully integrated with the U.S. anytime soon.

So I think we need to align with the U.S. We need to have comparable burdens on our industry, we need to set a comparable price on carbon, and we could even tie our price to the U.S. price, but going further and linking up would create a serious flow of cash to the U.S. If we took on a target like the 25% below 1990, it would be just enormous flows of cash from Canada to the U.S.

[Mark Warawa, Conservative, Langley, BC]

Okay.

How much time do I have, Chair? One minute.

Could you elaborate very briefly, then, on this massive flow of cash? Sustainable development requires a balance between a healthy economy and a clean environment. If we have billions of dollars flow out of our economy to meet international targets that are extreme—European targets—and then we are also being disadvantaged in the United States, what would that do to the Canadian economy?

[Dr. Rick Hyndman]

Well, I think it drains the capital or resources we need to tackle the problem. What we have said now for seven years is that we need to be part of the global effort and to make a serious effort, but we'd be much better off putting our resources into advancing technology that everybody needs, and that we in particular need, rather than simply paying somebody else who's managed to get a less aggressive target.

So our answer is, sure, take on a burden, but put it into technology that the world needs a lot more investment in.