Environment Committee on Oct. 27th, 2009

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

I may be able to come back to the question of the U.S. situation, but I'd like to hear from Mr. Turk on whether or not his industry has done any analysis of the impact of the government's plan of 20% by 2020 in terms of costs, employment, and effect on consumers from his industry's point of view.

[Eli Turk]

Certainly some of our companies have done it individually. We haven't rolled it up as a national association, per se. I can say, though, in terms of looking at strategies to meet those particular targets, that we're looking at trying to find cost-effective but at the same time innovative strategies.

I can give you a couple of examples. We've talked about trying to build more hydro. We've talked about wind. We've talked about solar. Nova Scotia Power now is a world leader in terms of hydro power in terms of using...and they're just about to install probably one of the largest underwater sea turbines.

There are just all sorts of new technologies to try to meet that.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Woodworth.

Mr. Hyndman, you mentioned that CAPP has done some of the economic impact work. Did you put together some numbers on what's going to happen possibly within the industry?

[Dr. Rick Hyndman]

We haven't done a lot of.... As I say, I try to do some simple stuff to indicate the magnitude of the policy impact as opposed to trying to work through how it affects investment, which is a very tricky piece of economic analysis to do. It's classically very difficult to predict oil and gas investment.

There are some things you can focus on and see. For instance, where your competitiveness is really at the margin, there are things like upgrading, as I mentioned, and now natural gas. B.C. shale gas is competing with U.S. shale gas much closer to the markets. It's at the margin. If its economics get upset relative to the U.S., then that will disadvantage them and tend to swing investment south of the border. The same would go for the upgrading.

How much would it affect bitumen production? That's a tougher thing to gauge. It depends on people's expectations about world oil prices. Of course, we don't pass the costs on to consumers. Our prices get determined in that international market. The effect of the policy is solely on the industry; well, it does have repercussions on the employees and the government and so on.

[The Chair, Conservative, James Bezan]

Thank you.

Monsieur Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chairman.

Thank you all for being with us today.

I would like to begin by making the point that electricity has huge potential here in Canada. We all agree on that. We are especially familiar with hydro electricity, which can be developed further, and electricity produced using wind turbines. Furthermore, it is now possible to achieve very high steam temperatures—of about 380 ^oC—using solar energy. That is well known. Here in Canada, we receive a great deal of sun. This research is on the verge of being completed and will soon be able to be applied.

We also know that deep geothermy can provide electricity all across Canada, something that would make it possible to satisfy all our energy needs between now and 2050. Additional research is required, but it is feasible. Electricity could also be an alternative energy. We can replace energy used for cars, industry and heating. It is a very flexible energy that can replace other forms of energy.

Have you assessed the economic potential of all the possible development options associated with the non-polluting production of electricity, Mr. Turk?

[Eli Turk]

You made reference to hydroelectricity. As I said at the beginning of my presentation, there is tremendous potential in that regard in British Columbia, Manitoba, Quebec and Newfoundland and Labrador. It is essential that we develop that potential. There are regulatory issues to be resolved, but we must develop it.

As regards renewable energy, we need every single one of these new energy sources. At the same time, there are some technical and economic issues that need to be addressed. In technical terms, when the sun shines, there is more energy, and when it is windy, there is also more energy. There is a lot of work to be done in terms of integrating current systems, because they were not designed to incorporate these types of technology; but we are in the process of doing that. When we are able to make the necessary technical changes, there will be additional wind and solar energy available.

In terms of the economy, in Ontario, for example, we pay 80¢ a kilowatt-hour for solar energy, whereas the cost of hydroelectricity and other technologies is 4¢ or 5¢ a kilowatt-hour. So, there are economic issues to be addressed there.

As you were saying, there is incredible potential. Our companies are all leaders when it comes to developing these forms of energy. We have not yet completed an economic analysis, but we have looked at the economics on a case-by-case basis. For example, solar energy costs about 80¢ a kilowatt-hour. We would like to see the technology evolve, in order to bring down the cost. That will certainly happen over time.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

You did not talk about geothermy, which is very important, because we may now be at the same stage we were for hydrocarbons 35 years ago in Canada.

We have started to produce solar energy, and we are now at the same point we were 30 years ago in terms of hydrocarbons in Alberta. If we were able to extract oil from the oil sands, we can surely produce other forms of energy.

Before the government tabled its plan, did it ask you about the job creation potential?

[Eli Turk]

Are you asking me whether there were discussions about job creation in the renewable energy industries, or in general?

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

I am talking about non-polluting electricity in general.

[Eli Turk]

Well, I don't have precise figures on that, but there were discussions with the government. We demonstrated that this would have a very positive economic impact. Of course, we would have liked there to be some economic development in terms of equipment production here in Canada. When Hydro-Québec carried out a project, one of the conditions was economic development in the province.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Perhaps the government delayed its announcement yesterday, because you had not gone far enough.

Are you in a position to provide us with numbers on job creation potential associated with all different forms of electricity?

[Eli Turk]

We could give you a rough evaluation; yes, that would be possible.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Chairman, can we be given those figures?

[An hon. member]

Yes.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Hyndman, I am referring now to Bill C-311. It talks about economic potential. When the government decided to change the reference year from 1990 to 2006, were you relieved? The fact is that, even though the government invested money to get the process going, the oil companies benefited.

When I went to Calgary with another House committee to meet with companies like Shell, we were told that, given the state of current discoveries and research, it will not really be possible to make significant reductions in CO₂ emissions per barrel of oil that is produced. The amount of water used has dropped from 6 gallons per barrel to about 4½ gallons, but the amount of CO₂ cannot really be reduced further. Is it your view that in order to reduce greenhouse gas emissions, the only real solution is to limit oil production?

[The Chair, Conservative, James Bezan]

You only have two minutes, because Mr. Ouellet's time has expired.

[Dr. Rick Hyndman]

Okay.

First of all, on 1990 versus 2006, that's of relevance for how you look at how the country is doing. There is no country in the world using 1990 as the basis for assigning targets to industry--no country. The U.K. used 2003 to 2005. Australia is using something more current. The U.S. is proposing to use something current and even looking forward. So that's not about the allocation to industry; that's just how bad you look as a country.

Where are the possible reductions in the oil and gas sector? There are two big areas that are possible, and some work is going on now and some was done in the past to do this. We had large flaring and venting reductions up until recently, and now they have stabilized and even gone up a little bit, so more work needs to be done on that. There are fugitive emissions, which are not trivial—leaks of gas from pipes in gas plants and pipelines and so on—so there is work that can be done there.

The big other one is in the way in which we produce the oil sands in situ resource—not the mining but the ones where we put steam in the ground to produce the oil. There are a lot of different kinds of activity going on as to alternative ways, lower energy ways of producing that, and that is one of the areas we need to focus on: technology, because you could get a step change in the emission and the energy intensity producing in situ with some alternative technology. But it takes time to prove it out, to try it on different reservoirs, and then scale it up and see if it works.

That is the most promising area in the oil sands that I am aware of.

[The Chair, Conservative, James Bezan]

Mr. Braid, you have the floor.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

Thank you very much to our witnesses for being here this morning and this afternoon.

Mr. Hyndman, if I could start with you, if I understood correctly at the very beginning of your presentation you indicated that you support the notion of a cap and trade system. Was that correct? Did I hear that?

[Dr. Rick Hyndman]

Like most economists, or almost all economists, I support the notion of carbon pricing. As I've said several times, I find the vocabulary—cap and trade, carbon tax—quite confusing and not particularly useful. And it is important to look at the details of how you do carbon pricing.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

I was encouraged to hear our Liberal colleagues resurrect their notion of a carbon tax earlier, by the way.

Are you aware that, when the government announced its intention to establish an offset system in the spring, we opened up a consultation process?

[Dr. Rick Hyndman]

Yes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Did you participate in that consultation process?