Environment Committee on June 5th, 2014

[The Chair, Conservative, Harold Albrecht]

I would like to call meeting number 27 of the Standing Committee on Environment and Sustainable Development to order.

Today all of our witnesses are appearing by video. Let me first thank all of our IT people very much for the work they do to make all of this possible. I'd also like to thank our clerk for living out the values of our environment committee by using video conferencing as opposed to a lot of travel. I think this is a great precedent we're setting.

That being said, we'll move to our witnesses. We have appearing from Renewable Energy Management, Mr. Lewis Staats and Doug Starr from Burlington, Ontario. As well by video we have, from the Ontario Waste Management Association, Mr. Peter Hargreave. From the Emterra Group we have Emmie Leung, chief executive officer and founder.

I think three of them are at the same location, which adds to our ability to cut costs and be efficient.

We will start with Renewable Energy Management. I'm not sure if Lewis Staats or Doug Starr is the spokesperson.

It's Mr. Staats.

We'll give each of the witnesses a 10-minute opening statement. Then we'll come back to the members for their questions after all three have made their presentations.

Mr. Staats, go ahead, please, for 10 minutes.

[Lewis Staats, President, Renewable Energy Management]

Good afternoon.

My name is Lewis Staats. I'm the president of Renewable Energy Management. I'd like to thank you for having me speak to the hearing today.

I'll give you an overview of the company.

At Renewable Energy Management, we are project development company. We control the Canadian and U.S.A. licence for Entech Renewable Energy Solutions, which is a low-temperature gasification process.

Entech-REM is a joint venture between our two companies, REM and Entech. Entech-REM is the legal entity that is pursuing a proposed project right now in Port Hope, Ontario, and will also be the entity that would pursue other energy-from-waste projects in our licensed areas of Canada and the United States.

As a project development company, REM does partner and will be partnering with organizations and companies that have industry experience in energy from waste, like an EPC organization, to engineer, procure, and construct the facility we're proposing for the Port Hope-Wesleyville area.

We'll also be working very closely with equipment vendors with best available technologies for the front end, a material recovery facility where the waste will come into our facility. Also, we're working with them and with equipment vendors and areas for the boiler, steam turbine, and air quality control systems, which are all key components of the energy-from-waste facility that we're proposing to build in Port Hope. REM is answering the call for the Government of Ontario's need for thermal and gasification technologies to address Ontario's ever-increasing waste and environmental issues.

I'd also like to mention that I'm also the president of Grand River Green Power. Grand River Green Power is a 100% aboriginal-owned company, based on the Six Nations of the Grand River in southern Ontario. Grand River Green Power was established in 2005 with a focus on investing in green energy companies, our initial focus being in the wind and solar area.

Grand River Green Power conducted detailed wind studies on lands that we control in the Six Nations first nation community, but the wind regimes proved to be marginal at best, so we expanded our scope after that. We actually took a bit of a detour and did some other investments, but in 2012 we came back and decided within our management team to refocus Grand River Green Power and expand our area of investment opportunities to include other green energy verticals, with a desire to invest in Ontario, Canada, which resulted in our introduction to Renewable Energy Management.

Grand River Green Power did extensive due diligence on Renewable Energy Management and the Entech technology, which included a trip down to Port Hope to get a first-hand introduction and first-hand information about a project that was already in the works when we were looking at REM for a potential investment. In the fall of 2012, Grand River Green Power made the decision to invest. With the investment, we became the second-largest shareholder in Renewable Energy Management. I became the day-to-day present of REM in March of 2013, and I've been leading our efforts ever since then.

I will tell you a little bit about Entech. Entech's head office is in Perth, Western Australia. Entech has 20-plus years in the energy-from-waste space, and they specialize in the low-temperature gasification process. Much like REM, Entech is a company that designs, engineers, and commissions facilities based on their low-temperature gasification process, also in conjunction with local EPCs and other vendors in the areas wherever their facilities are being built.

Entech's system is modular in design. This design allows each facility to effectively process waste based on the volume and energy content of the waste streams that are available. There's no “scale up” risk with additional modules in a facility like the one we are proposing. Entech has years of experience in processing numerous waste streams utilizing their low-temperature gasification process.

In terms of the Port Hope project itself, we actually sent a contingent of people, a delegation from Port Hope, along with our staff, to visit two operating Entech facilities in Poland as we continued to move through the process of getting the energy-from-waste facility started in Port Hope.

The final thing I'd like to talk about in the presentation is our workings with the Ministry of the Environment here in Ontario. Our proposed project meets the MOE's requirements for their environmental screening process for waste management projects, according to Ontario regulation 101/07. Conestoga-Rovers and Associates were appointed by Renewable Energy Management as our environmental consultants to carry out numerous studies and the work required to meet the strict requirements that are put in place by the MOE.

REM has done a substantial amount of consultation over the past four years as the proposed project in Port Hope has evolved. The consultation has been with key stakeholders in the area, including the Municipality of Port Hope, Northumberland County, aboriginal groups in the area, academic institutions, the local business community, and the general public, with three open houses held over that period of time.

Entech-REM submitted our environmental screening report to the Ministry of the Environment in Ontario in late September 2013. Subsequent to the environmental screening report being submitted, REM, in conjunction with Conestoga-Rovers & Associates, is at this point in time conducting a human health and ecological risk assessment report to further support the environmental screening report and assure compliance with the MOE's regulatory requirements. This final detailed report is in the works right now, and will be completed later this year.

With that report finalized, the Entech-REM project will move into the second and final stage of the MOE approval process here in Ontario, which is an environmental compliance approval. That's the final stage of the MOE approval process, which focuses on the actual design and operation of the facility we're proposing to build in Port Hope.

It's only after we get through our final approval from the Ministry of the Environment on the steps I've just outlined above that we would be looking to begin construction of the proposed energy-from-waste facility on Wesleyville Road in Port Hope, Ontario.

Thank you.

[The Chair, Conservative, Harold Albrecht]

We'll now move to Mr. Peter Hargreave from Mississauga, and the Ontario Waste Management Association.

Mr. Hargreave.

[Peter Hargreave, Director, Policy, Ontario Waste Management Association]

Thank you very much. Thank you for the opportunity to provide a submission today.

As background, the Ontario Waste Management Association is a not-for-profit industry trade association. We represent over 300 private and public sector members who manage roughly 85% of the waste in Ontario.

Our members have diverse interests and capital investments in areas such as waste and recycling collection, landfills, transfer stations, material recycling facilities, energy from waste facilities, organics processing, and hazardous waste from both recycling and disposal perspectives.

Today's topic is quite expansive and would likely fill several days of discussion, so I have chosen to focus specifically on three areas in which the federal government should be taking a more active role. These are doing data collection, providing environmental standards, and ensuring competition and extended producer-responsibility programs.

I should emphasize that we are speaking in an Ontario context. The situation in each province is slightly different, but there are obviously a lot of consistencies.

Let me begin by providing some context about current problems and opportunities associated with waste management. The waste management sector is in the process of a monumental change. Previously materials managed were regarded as suitable only for disposal. This is certainly no longer the case. Waste collected is valued as a source of raw materials and energy that can be rerouted back into the economy after proper processing and collection. Recycled materials are actually commodities: aluminum, steel, paper, and so on.

Organizations are spending millions to pursue these commodities, but innovation and technological advancement can achieve only so much. Whereas there has been some success in harnessing the value of Ontario's waste, particularly residential waste, the overall recycling rate or diversion rate has remained relatively stagnant at under 25% for the last two decades. As a result the vast majority of our waste remains destined for disposal, and around three million tonnes of industrial commercial waste is exported to U.S. disposal facilities. That represents around one-third of Ontario's annual disposal needs. It represents an enormous loss of resources and economic opportunities.

It is not just the material or energy value from the waste that is lost but also the business opportunities associated with integrating recovered resources into new products and packaging that can be sold again. Diversion activities are hindered largely as a result of the wide differential between the cost of disposal and the cost of diversion. Issues related to convenience and capacity are also contributing factors.

As the waste management sector is largely dictated by regulation, it will take strategic government involvement to harness the value of waste as a resource. This involves utilizing economic tools and opening competitive markets coupled with environmental standards and oversight.

A Conference Board of Canada report released last week confirms what we have long known, that there is a significant net economic opportunity associated with waste diversion. A conservative estimate by the Conference Board of Canada suggests that if Ontario's waste diversion rate were increased to 60%, that increase would support close to 13,000 net new jobs in the province and provide a boost of about $1.5 billion to the GDP.

While jurisdictions throughout the world are moving forward with strategies to take advantage of waste diversion as an economic driver, we are being left behind. Over a year ago we released a report entitled “Rethink Waste”, which provided recommendations to better harness the economic benefits of resource management in Ontario. Several of these recommendations apply to the federal government.

Let me start with the need for sound data. Statistics Canada is currently the only source of broad-level information on the movement of waste materials in Ontario and across the country. I've referenced some of their numbers in my presentation so far. While it provides a reasonable high-level picture, it does miss large portions of data, and it lacks detail that would allow businesses and policy-makers to make more informed decisions. This is an area in which the federal government should be working with provincial governments and with the waste management sector to make improvements.

We've also consistently advocated the importance of environmental standards for the waste management sector. Currently companies that play by the rules in terms of quality and due diligence are often adversely impacted by companies paying scant regard to how their processes affect the environment and human health.

Without a common set of environmental standards, it is difficult, if not impossible, for recyclers and other diverters who have invested in sound technology and processes to compete in the marketplace, since non-conforming processors are able to sell their materials at a lower cost for higher margins. These standards are needed to help foster competition and innovation in the waste diversion sector by promoting a level playing field amongst processing facilities.

Evidence for this has been seen in the aftermath of China's Green Fence policy, which strictly enforces regulations on importing contaminated scrap materials into the county. While the policy has put some recyclers out of business, at least temporarily, it has opened up opportunities for those companies that invested in sorting equipment and labour as well as other features to deliver high-quality material.

In addition, an accountability framework is also necessary to enhance the transparency of material flows from the point of collection through to final disposition. There certainly have been a lot of concerns around the export of materials like waste electronics, plastics, and other waste materials.

With a vacuum in political leadership, the OWMA has moved forward with funding a process under the Canadian Standards Association to develop a broad-based recycling guideline. Our hope is that the guideline will be used by purchasers of services, including governments, or adopted by the government as a requirement to operate.

Finally, I want to touch on extended producer responsibility and competitive markets. EPR is an economic policy approach in which producers of products and packaging bear responsibility for ensuring proper end-of-life management of those materials. It is a policy concept that's been endorsed by the federal government and by the CCME.

The application of EPR has grown tremendously over the last five years and is expected to continue to grow across the province. In most jurisdictions, under this approach, stewards of designated materials combine into a single collective stewardship agency. These monopolies allow businesses to run collective programs, set recycling fees, and externalize these fees directly on to the consumer. In many ways, eco-fees are private taxation, in essence.

In Ontario, the Minister of Environment and all the political parties have referred to these agencies as a form of cartel. Take waste electronics as one example. The Electronic Products Recycling Association operates programs in B.C., Saskatchewan, Manitoba, Quebec, Nova Scotia, and P.E.l., and indirectly in Ontario. In these provinces, this entity is allowed to directly charge consumers over $115 million in fees annually, completely unhindered by government oversight or accountability.

Taking into account other materials including tires and beverage containers and new programs coming into effect, the impact on the consumer grows exponentially. The consumer has no choice but to pay these fees. It is amazing that the Competition Bureau has not addressed what is essentially fee-setting under the auspices of environmental protection.

In Europe, competition bureaus have started to take action. Germany and Austria have both recently taken steps forward towards market liberalization and the elimination of producer monopolies, which distort both consumer and recycling industry markets.

The German Federal Cartel Office indicates that, after addressing these monopolies, costs to consumers dropped by more than 50%.

The Competition Bureau in Canada should be taking action in this area. These issues have been brought to its attention, but as of yet there has been no substantive action. We have the opportunity to avoid the competition pitfalls experienced in Europe in this area, but the bureau really needs to engage this issue.

Thank you very much.

[The Chair, Conservative, Harold Albrecht]

Thank you very much, Mr. Hargreave.

And thanks to both of our witnesses so far, for being well under their allotted 10 minutes.

We'll move finally to Emmie Leung, chief executive officer and founder of the Emterra Group.

Go ahead, Ms. Leung.

[Emmie K.H. Leung, Chief Executive Officer and Founder, Emterra Group]

Thank you.

My name is Emmie Leung. I am the CEO and founder of Emterra Group.

I would like to give you a little of my history. I was born in China and raised in Hong Kong, and I got my degree at the University of Manitoba. I came to Canada in 1972 alone without family, and I truly enjoy to being in Canada, particularly Manitoba. They certainly live up to their name there of “friendly Manitoba”. I'm grateful to have this opportunity and say thank you to Canadians. I became a Canadian citizen many years ago and I'm very happy and very proud to be a Canadian.

I will go back to how I started the business. In 1976 when I graduated I could not find a job. Just like any young graduate with a lot of aspirations. I ended up saying to myself that if nobody wanted to hire me I might as well become my own boss, so I created the business. But at the time of creating a business, of course being a poor student I asked myself if I should sell lemonade or create a hot dog stand. I realized when I was looking for a job that there were a lot of available commodities in the streets and back alleys: old cardboard and newspapers. I came from a country where they would take them as resources. Immediately a light came on. I said I was going to start a business in recycling. At that time the word “recycling” was not there. They called me the junk lady.

So I went to Vancouver to start the business in 1976. I started the company and started picking up newspaper. It was a one-man-band, so I know the business really well. Now our company is a $100 million business annually, and we employ approximately 1,000 people. So I am very proud to be here to tell you the success story.

Our business is 100% the result of diverting waste and creating value. So let me give you an introduction to our business and how this business can help Canada as well as the economy. Later on I will give you some prime examples of what I have achieved and the data and then the recommendations.

Our company looks at things differently. What do we care about? We care about your discards—something you have no more room for. So we transform these discards into saleable commodities, and green energy too.

We have 17 operations in Canada: eight in B.C., seven in Ontario, one in Manitoba, and one in Saskatchewan. We have processed half-a-million tonnes of recyclables and we service close to 10% of Canadians every day. We have four operations. First is Emterra Environmental...[Inaudible--Editor]...as an integrated company, collecting recyclables and solid waste as well as processing the waste into commodities and marketing it.

The next division of our company is Canadian Liquids Processors Limited, which is a unique company. It turns liquid waste into ethanol. Another company we have is Emterra Tire Recycling, which turns old tires and scrap tires into rubber seals and fibre. And, you will laugh, because I have a landfill. Whatever we cannot recycle I am pleased to put it in the landfill.

As I mentioned, every one of our companies is integrated. We go to the customer to pick up the recyclables and turn them into finished products and then we sell them. Our goal is to work with our partner to reach their waste diversion and waste reduction in the most effective and efficient way.

Throughout these 38 years we have had lots of milestones, of course. As I mentioned, in 1976 I started the company. In 1982 I started the first operation in B.C. In 1995 I expanded into Ontario to start the company, and in 2003 we expanded into Manitoba, and last year we expanded into Saskatchewan.

In 2003 we started the largest cold climate, extreme climate, wind fleet. We have 58 CNG trucks every day on the road to collect waste as well as recycle in the city of Winnipeg. We just placed an order for another 20 some-odd CNG trucks and placed an order for another CNG station.

By the end of this year we will have three CNG stations installed and working. Fast forward to this year and we created a company called Green by Nature EPR, which services Multi-Material BC. The company's been selected to process all the recyclables in the whole of British Columbia.

As I mentioned, the company is very integrated and we see the value chain. Right at the bottom is waste and it goes all the way to creating a product that commands $2,000 in revenue, which is aluminum cans, and for some of the plastic we command $600 or $700 a tonne. Of course, I hear lots of people talk about mixed plastic being a hassle or a problem. I'm going to tell you that this is not correct. There are lots of myths out there, and we understand there are 58 containers in [Inaudible--Editor] that create lots of problem, and I'm going to introduce some innovation and share with you.

We just mentioned a little bit about Emterra Tire. In all my companies, including the liquid processing company, 100% of the waste is being recycled. There are no emissions. There's no pollution. So you have an industry of that nature. I believe every one of your decision-makers has opened their arms to welcome us, and I hope so. I count on that.

With respect to the liquid waste processing company, we take in anything you put in your mouth, or more, to the liquid waste primary, including stale products or over-production product recall, which is a confidential destruction business. After the destruction lots of people just put it back into the landfill, but we don't. We recycle all; the liquid goes through a fermentation process and into ethanol. We bale up all the packaging, just like the bottles and the cardboard, and then sell it as a commodity. Again, in this business 98% of our incoming product is being recycled.

As I just mentioned a little while ago, the ethanol is being incorporated into the diesel, creating biodiesel, and right now we are creating a new product called windshield washer fluid from the liquid waste. That is wonderful. It's a cradle to grave product.

[The Chair, Conservative, Harold Albrecht]

Ms. Leung, if I could just interrupt you for one minute. You have one minute left and I want to encourage you to move most quickly to the most important part of your presentation.

Thank you.

[Emmie K.H. Leung]

Okay. Thank you.

Innovation is very important in our business because things change every day. In the old days, we hand-sorted. Now we mechanical-sort and optical-sort. That means efficiency. I would like to share with you information on our costs for the region of Halton. It's only 78¢ a tonne for the blue box costs. That's for the integrated ones, not the other ones, because they did not employ the most innovative system to do so.

I'd like to give you our recommendations. As you say, that's the most important part. We spend lots of money on innovation, and I'd like to make our recommendations to you.

Our company employs a thousand people. I've read the same thing that Peter has, in reference to the Conference Board, where they talk about 4.88 full-time equivalents if we recycle one thousand tonnes of recyclables. Right now we understand that we only recycle 11% of our six million tonnes of our garbage in Ontario. If commercial businesses followed the residential sector and diverted 38% of their waste, they would be able to increase job creation by 12,000 people. If we extended that nationwide, you can imagine how big that opportunity would be. Of course, with jobs we have a multiplier effect in terms of economic development.

The next thing I'd like to encourage you to do, and recommend that you provide, is R and D. I'm not here to ask you for money. The important thing is that I'd like you to create an agency to give one-stop shopping so that we don't have to go through a stack of paper to find out where we get help.

The next recommendation I'd like to make—

[The Chair, Conservative, Harold Albrecht]

Ms. Leung, I need to interrupt. We're well beyond your 10 minutes.

Hopefully you can incorporate some of your recommendations into your responses to committee members' questions. If not, you've given us a great slide deck in English. Unfortunately, because it wasn't in both languages, we weren't able to distribute it to all committee members, but it is being translated. Your recommendations are clearly articulated there, so don't be afraid that we will not get to them. Although we don't have time today to let you continue with your presentation, if you could work your recommendations into your responses, that would be great.

So thank you very much for your presentation. It was very interesting.

Our first questioner will be Mr. Woodworth, for seven minutes.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much, Mr. Chair.

My thanks to all of the witnesses. It's really great to hear evidence of this nature, because often we have a story of doom and gloom spread by many in our government system about environmental efforts. Each one of you has a real story of hope and optimism going down the road, and I thank you for that.

In particular, Ms. Leung, I'm sorry that you're not here in Ottawa; I would liked to have met you and shaken your hand in person. You've clearly been a prototypical success story. I congratulate you on the business you have built.

I'd like to begin by asking each of you if you've had any assistance from or involvement with a federal agency known as Sustainable Development Technology Canada and, if so, what your involvement with that company was.

Maybe I'll start with you, Ms. Leung, because you were talking about research and development. Have you had any engagement with Sustainable Development Technology Canada?

[Emmie K.H. Leung]

I have to apologize, but no, I have not.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

All right. I'm not saying that you have to, but I know they're interested in issues of this nature, particularly green energy.

Mr. Staats, have you had any involvement with Sustainable Development Technology Canada?

[Lewis Staats]

I don't believe we have, or not in my tenure with the company.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Okay.

Mr. Hargreave, I would ask you the same question.

[The Chair, Conservative, Harold Albrecht]

I believe he has disappeared temporarily.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Oh. Sorry about that; I'll move on to something else.

Mr. Staats, I'd like to ask you about the economic model that your operation will pursue. Obviously you've made a pretty healthy capital investment. I don't know whether any other level of government has also invested in the capital development of your operation, and I would like to hear about that.

I'd like to hear also about what the economic model will be going forward. How will ongoing costs be recovered?

[Lewis Staats]

Thank you very much.

Basically, Renewable Energy Management is a completely private sector company with private sector investment. To date we have requested no government funding nor has any been put into the company.

The economic model of our proposed facility—again, on the premise that we get all of our approvals—would have a capital investment of $150 million to build and commission the facility, creating 250 construction jobs over a two-and-a-half year period. Then it would sustain 34 or 35 full-time jobs once it's commissioned and in operation.

Our business model would see us processing 165,000 tonnes of waste. We would negotiate a tipping fee for that waste to be brought to our facility. The other end of it is that we will be negotiating for a power purchase agreement with the Ministry of Energy here in Ontario to take the 15 megawatts to 18 megawatts of power we will produce from the 165,000 tonnes of municipal solid waste and IC&I waste we will process through our facility.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

On that last point, Mr. Staats, will you be receiving a competitive market fee for the energy you produce, or will you be requiring some form of government preference in that fee?

[Lewis Staats]

Again, at this point in time our understanding of the process is that we're going to be negotiating with the Ontario Power Authority for the amount that we would be paid per kilowatt for our energy that we produce from processing the waste. The expectation is that we'll fall within the acceptable levels the government would have in negotiating other power purchase agreements for companies that are in our stream. As I said, there have been a few that have been coming on stream, including one just west of us in the York-Durham region, and we would expect that we'd be negotiating a similar deal to theirs, with our facility.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

That's very good.

I'd like to stay with you just for another minute, Mr. Staats, although on a slightly different subject.

I'm not really familiar with gasification. I don't know what by-products are left over when you gasify. Are there, for example, GHG emissions? Is there water that has been in any way contaminated? Can you sort of describe the chemistry, if you will, of gasification and what adverse impact, if any, it would have on the environment?

[Lewis Staats]

I'm going to have Mr. Doug Starr answer that question.

[Doug Starr, Executive Vice-President, Renewable Energy Management]

The low-temperature gasification process.... First of all, all the waste, sir, will be under contract and there will be specific types of organic waste brought to the facility.

As the waste goes through the thermal degradation or the primary gasification chamber, basically what we're doing is culling out all the carbon base that's in the waste and we're producing what's called a synthetic gas, or syngas. As a result of the process, we are right now decomposing or degrading the waste down to about 2% remaining as an inert, non-toxic ash.

As a result of putting through 100 pounds, we're left with 2% of that product as an inert, non-toxic ash. What we are creating is a synthetic gas. It will then be combusted, just as we combust a natural gas. For this particular facility proposed project, we'd be taking that gas and turning it into a high-pressure, high-temperature steam through a steam turbine to produce the electricity that we'll be purposing.

All of the impurities or compounds are going to be oxidized in the syngas burner and consequently at the back end, as Lewis alluded to in the presentation, we'll have an air quality control system that's designed to pull impurities out of the process.

[The Chair, Conservative, Harold Albrecht]

Okay, thank you, Mr. Starr and Mr. Staats.

Mr. Woodworth, do you want to take 15 seconds to ask your question of Mr. Hargreave, regarding Sustainable Development Technology Canada?

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Yes, thank you.

Mr. Hargreave, I was just inquiring from each of the witnesses whether they had any dealings or assistance in the research and development or other areas from Sustainable Development Technology Canada, and I would ask the same—

[Peter Hargreave]

We have not, to my knowledge.