Evidence of meeting #137 for Environment and Sustainable Development in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was forest.
A recording is available from Parliament.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
We're out of time on this one. Somebody else may want to pick it up.
Liberal
Senior Advisor, Government Affairs, Dow Chemical Canada Inc.
In Idaho, they are converting it into a raw crude diesel, and they're putting it right back into their municipal fleets.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Thank you.
Mr. Carrie, you're next.
Colin Carrie Oshawa, CPC
Thank you very much.
We have great witnesses today. I'm going to bounce right into it.
Mr. Murray, I'm going to ask you three questions. If you can get to them, that would be awesome. I'll ask you all the questions now, because I want to shut up and let you talk.
First, what do you think the reason is that Canada won't recognize European standards for these boilers? Is there a safety issue? Is there some other thing going on?
Second, you mentioned Ontario Hydro One or the Ontario hydro pilot project. I was wondering if you could elaborate.
The third one is with regard to subsidies. You managed to put these wood chips on a train or a truck, take them to Vancouver, ship them around and put them into the U.K., and it's still a cost-effective way of heating and providing energy. My understanding is that Europe does have subsidies or something like that. If the subsidies go away, is that still going to be cost-effective?
Executive Director, Wood Pellet Association of Canada
Quickly, with regard to the boiler standards and why the Canadians won't accept them, I don't have a good answer for that. For a long time, boilers have been made to ASME standards, which work perfectly well for fossil fuels.
Biomass fuels are relatively new, and the boiler manufacturers in North America haven't made these boilers. In Europe, they have. They have different standards there. It's a matter of convincing all of these different jurisdictions to adopt what the Europeans are doing.
Executive Director, Wood Pellet Association of Canada
It is a safety issue because there are pressure standards.
Executive Director, Wood Pellet Association of Canada
That's why it's a safety issue, so they're being cautious. They have to be educated. We're going through that process. They're perfectly safe in Europe. There have been no issues, but we have to convince the regulators here, the engineers and everybody. They have to understand it and accept it. That's the process that we're going through right now.
As for the second question, I'm not sure what that was. I think I mentioned Ontario Power Generation, so that was the first company. Ontario was actually the first province to phase out coal, and then Ontario Power Generation converted two power stations up in the Thunder Bay area. One of them had to shut down lately because it had a very severe boiler problem that couldn't be resolved. The one at Atikokan runs as a peaking plant in an area that mostly has hydroelectricity, so it only runs about 20% of the time, but it runs very successfully.
I think your third question was about subsidies. Wood pellets are more expensive than coal. Every country that has used them has put policy in place to try to incent them. There are either mandates.... In South Korea, there's a mandate that you must produce a certain amount of renewable electricity. In the U.K., they have contracts for difference, so there are long-term agreements between the government and the power companies that essentially they'll cap up the difference in the cost. There's enough confidence from the power industry, which has invested billions of dollars in converting all of these units, so obviously the investment community is convinced enough to make the investment. These subsidies run until 2027. We're anticipating by that point that everything will be depreciated and that we'll be able to run subsidy-free after that point.
I should point out that there is no Canadian subsidy on wood pellets.
Oshawa, CPC
All right. Thank you very much.
I'll skip over to Mr. Thurlow.
It's good to see you again. You mentioned a term that I wasn't aware of: pyrolysis. I'm just curious if you could expand on that. Are there any plants in Canada that can take these plastics and turn them into diesel? If not, why not?
Senior Advisor, Government Affairs, Dow Chemical Canada Inc.
To my understanding, there is one just outside of Halifax. I'm not sure whether it's operational or not. It's either right ready to start or it's just starting up. The issue with pyrolysis is getting the material to the facility. Halifax is far away from Toronto, so that will add a very significant cost.
Pyrolysis plants, for the most part, are actually very affordable, by comparison. A pyrolysis plant that would deal with 4,000 tonnes of garbage a year costs less than $5 million. It's not difficult; it's just about finding the critical mass to have all of the appropriate pieces in place to make it make sense economically and to have a willing municipality. I can't emphasize enough the importance of having a MRF that is willing to participate in this process. If they're not willing to help out, all the economics fly out the window.
Oshawa, CPC
How much would a gallon or a litre of diesel coming out of there cost? Is it cost-competitive with the traditional sources?
Senior Advisor, Government Affairs, Dow Chemical Canada Inc.
It goes back to what I said in my presentation, that a lot of environmental costs don't have dollar values associated with them. Right now there are significant costs associated with the collection and disposal of garbage, but these are costs that don't factor into the business decisions. They are costs that are borne by the taxpayer. We need to take a better look or a different look at how we do a full life-cycle accounting associated with this type of energy recovery.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Thank you.
It's over to you, Mr. Amos.
December 6th, 2018 / 5:10 p.m.
Liberal
William Amos Liberal Pontiac, QC
Thank you, Chair.
Thank you to our range of witnesses. This has been a really broad discussion. I'm interested in a bunch of different angles.
First, to our friends at FPInnovations, we have a project proposal in our region around the conversion of woody biomass into sugars for industrial and other uses. It's very exciting technology. I had the opportunity to go to PaperWeek in Quebec and learn more and more about this. I'm personally very excited by the future that you're presenting to us.
I am looking for a brief answer on whether or not you foresee a near-term future where projects like this can be done without massive government subsidies. I understand that these are exciting projects. I would love them to land in my region. I'm sure many other MPs would as well. But when tens and sometimes hundreds of millions of dollars of public funds are in question, it can be very challenging. Taxpayers rightly ask tough questions.
How do we get to the point where we can start really taking advantage of our biomass without asking the taxpayer to do so much work?
President and Chief Executive Officer, FPInnovations
I think the honest answer is that it will take a few to get there. Every member of the industry has certain capital decisions to make: either to invest in transformation or to invest elsewhere. It's that simple. Transformation is costly. It's risky. In terms of help from the government, it helps us and them to de-risk the technology, to show its feasibility, and quite frankly to catch up with what the competition is doing in Brazil and in Finland.
That's where we are today. It's sad to say, but we're in a catch-up mode in the technology to transfer forest biomass to bioproduct. Why and how? It is what it is. Help is needed to get over the hump, to get to the stage where you've gone from the lab to the real plant, which is a pilot plant.
I think pilot plants are a fantastic tool that the government has. It's not at full scale. It's not $300 million but $20 million or $30 million. A real plant would be $300 million, even half a billion. If you want a real biofuel plant that's large-scale, welcome to the billion-dollar world. We need those $20-million or $30-million ones just to prove the concept. Then the risk reduction and capital investment make sense. You don't manage a 30% risk; you manage a 10% risk. That helps you get there.
Liberal
William Amos Liberal Pontiac, QC
I understand what you're saying. I also understand that our government has invested significant sums through the IFIT program, particularly in the wake of the softwood lumber dispute, in order to enable such projects to move forward. The National Research Council is very involved. There has been all sorts of support. It's just that when tens of millions of dollars are involved, it can be a very big lift. That doesn't mean I'm any less hopeful. I just wanted your thoughts on that.
I want to go to you, Mr. Thurlow, on plastics. I thought Mr. Stetski's question was a good one, about how this Hefty bag program deals with plastic bags. I would like to spin the question a bit differently. I appreciate that the proposal you are providing offers the redeeming feature of helping deal with some of the plastics that are now going straight into waste disposal or otherwise going into our oceans and causing significant damage to our ecosystems.
Particularly on plastic bags, though, why not move to the reduce before moving to the recycle? Would Dow not agree that there is a strong case to be made that we simply reduce the number of plastic bags?
Senior Advisor, Government Affairs, Dow Chemical Canada Inc.
First and foremost, that is up to the consumer. It's up to the consumer to determine whether or not they want to make those types of choices. Our family does. I'm sure many other families do, but if you're implying some kind of a product ban, I don't think product bans work. I think there's quite a bit of evidence that shows that, in some cases, they actually have the opposite effect of the environmental goal they are pursuing.
Ultimately, I think the best mechanism is to have some type of recovery, where we make sure that if we use a plastic, we will continue to use that plastic through the environment. We can find ways for consumers to make those choices themselves, about what decisions they want to make in their day-to-day lives.
Liberal
William Amos Liberal Pontiac, QC
I understand that, and Dow had the same position in relation to cosmetic pesticides many years ago. I think history has shown that.... Bans on cosmetic pesticides, arguably, could have been in the hands of the consumer, but government took hold of that issue and delivered a public interest result that I think was appreciated by many Canadians in many, though not all, jurisdictions.
Herein lies the challenge. The consumer, through the mechanism of our constituency offices, is clearly indicating, through petitions and letters, that they want change to be made. I don't know that leaving it to the great mass of consumers is the right path forward. Clearly, Dow doesn't agree with that.
Senior Advisor, Government Affairs, Dow Chemical Canada Inc.
I think we have to look at the actual problems we're trying to solve. As I said in my presentation, we don't believe that any plastic should ever be thrown out. If we could find a way to recover it, we would absolutely recover it. Consumer behaviour, unfortunately, doesn't always work that way.
The other issue—and this needs to be recognized very clearly—is that the global plastic waste phenomenon is not necessarily a Canadian-driven phenomenon. We have a lot of waste management practices that we should aggressively export into Southeast Asia, to prevent those plastics from getting into the natural environment.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Your time is up.
For the last three minutes, we will turn it over to Mr. Stetski.
Kootenay—Columbia, NDP
Thank you.
I wanted to give each of you a quick opportunity. What's the number one thing the federal government can do to help you and your industry reduce GHGs? I'll just go down the row. We can start at this end if you like. I have only three minutes in total.
What would you like to see our government do?
President and Chief Executive Officer, FPInnovations
If we're talking about policy—and for an engineer that's going to be a new thing—the amount of regulation, the intersection between federal and provincial regulations that limit access to fibre in the industry, is probably one of the things that would block us the most going forward.
We're talking about using the forests. Canada is one of the places with the best usage of forests. It's a renewable resource. Managing the forest better and expanding the usage of forests is a path to reducing GHG, if you consider the forest as a sink for carbon. More usage of forests is better.
