Environment Committee on March 29th, 2022

[The Chair, Liberal, Francis Scarpaleggia]

Ms. Pauzé, you have the floor.

[Monique Pauzé, Bloc, Repentigny, QC]

Good morning. Thank you for joining us.

My first question is for Mr. Mousseau.

Earlier this month, you made a comment. I'll remind you of what happened in Quebec. An agreement was reached between Hydro‑Québec and Énergir. Ultimately, Hydro‑Québec's customers will likely pay for it. You said that this approach was incompatible with Quebec's climate objectives.

Could you elaborate on this incompatibility between Quebec's climate objectives and the federal government's subsidy practices that make taxpayers' money available to the Canadian oil and gas sector?

I want to know whether what happened in Quebec could apply to the federal level.

[Prof. Normand Mousseau]

Thank you for your question.

In Quebec, we have solutions for carbon-neutral construction. Continuing to use natural gas and invest in furnaces for facilities that will last several decades will prevent Quebec from achieving the objectives it has set. We're talking about a 37.5% reduction in GHGs by 2030.

In Canada's case, it's much the same thing. From the start, people have been talking a lot about carbon capture, utilization and storage. However, utilization in that way is completely at odds with net zero objectives. If we want to remove carbon, we will need to store it, sequester it forever. If we remove carbon, use it to extract more oil or for other applications and release it elsewhere, we are acting in a way that's incompatible with climate targets. It's important to point that out.

[Monique Pauzé, Bloc, Repentigny, QC]

You talk about carbon capture and storage. However, Mr. Agnew and Mr. Goodman said earlier that in this case we shouldn't be talking about subsidies.

In your opinion, should we instead conclude that, because that method is used, these are in fact fossil fuel subsidies in disguise?

[Prof. Normand Mousseau]

It depends on the objective. In the context of the Paris Agreement, for example, oil exported from Canada and burned elsewhere is not included in Canadian climate targets. If Canada reduces its emissions but exports oil, those exports do not count on its balance sheet.

In my view, subsidies should be used to decarbonize overall utilization. We may be able to justify subsidizing production of blue hydrogen, which represents at least a 90% life cycle reduction over methane, that is, grey hydrogen. That would transform the entire economy.

Using capture and storage to subsidize exports seems inappropriate to me given that we must move towards net zero and that funding must be devoted to transforming the energy system as a whole.

[Monique Pauzé, Bloc, Repentigny, QC]

If I understand correctly, you're keeping the word “subsidize”. You really see this as subsidies for capturing carbon.

[Prof. Normand Mousseau]

Yes. Any money that goes to an industry, whether it's a tax credit, royalties or anything like that, is a subsidy, in my opinion.

[Monique Pauzé, Bloc, Repentigny, QC]

Okay. Do you see any danger in burying carbon?

[Prof. Normand Mousseau]

It carries some danger, but we don't know much about it. However, our models clearly show that it will be impossible to meet net zero objectives in Canada without storing carbon. Nevertheless, we need to use it as a last resort. We must reduce emissions elsewhere, because based on our models, even if we reduce emissions and electrify as much as we can, we will still need to store 150 million tonnes of carbon per year in 2050. That's a huge amount.

If we take the easy way out, keeping oil and gas everywhere and storing carbon, we will end up with astronomical amounts of carbon to store. That won't be manageable in 2050.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you very much.

My next question is for Mr. Rousseau from the Canadian Labour Congress.

Some groups, including Iron and Earth, are calling on governments to create meaningful programs to add value to the oil and gas trades during the transition to renewable energy. I am thinking in particular of the DEEP geothermal plant in Saskatchewan.

Mr. Rousseau, how much do you feel the federal government should invest in transition programs for the various trades currently in the oil and gas sector?

How much are governments listening to you?

You have one minute to respond.

[Larry Rousseau]

I will quickly respond and ask my colleague Tara Peel to add her comments.

I want to make one thing clear: the CLC isn't saying that there should be no subsidies, but rather that they should be directed to what will support workers, who are constituents.

Ms. Peel can answer the rest of the question.

[The Chair, Liberal, Francis Scarpaleggia]

Please keep your response brief, Ms. Peel.

[Tara Peel, Political Assistant to the President, Canadian Labour Congress]

As my colleague said, we are not arguing that all subsidies are inherently bad, but if they are properly targeted, subsidies can support the low-carbon transition and avoid the associated bankruptcies and unemployment risks. For example, careful government spending can support worker transitions from fossil fuels to clean energy.

I'll just quickly speak to the affordability issue that has come up. Ensuring affordable energy access in remote and northern communities in Canada is an absolute necessity and historically some fossil fuel subsidies have enabled this.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll have to go to Ms. Collins now.

[Laurel Collins, NDP, Victoria, BC]

Thanks so much.

My questions are also to the Canadian Labour Congress.

Over the past three years, Canada has invested 14 times more in oil and gas than in renewables. I'm just curious if you think that ratio should be flipped. What would it mean for the workers you represent if the government were to invest adequately in a just transition and in renewables?

[Larry Rousseau]

For the latter part of your question, that is exactly what we're asking for, to make sure that the investments are targeted, and that does include tax and the other kinds of subsidies we're talking about. We need to make sure that the funding that the government is looking at is going to help maintain.... The boom and bust economies, which is what we've seen for the 150 years of Confederation, have to stop. The whole approach of the industry is that, once it's not profitable, then the workers are thrown out on the street. We have to make sure that we have a plan going forward as to how are we going to support the workers.

[Laurel Collins, NDP, Victoria, BC]

Can you speak a little bit more about what you'd like to see in that plan for workers in a just transition?

[Larry Rousseau]

I'll ask Tara to round that out, because there are some specific measures we'd like to see.

Go ahead.

[Tara Peel]

I guess part of the question is getting a handle on what these subsidies are, and it's really hard for those of us looking to see what these are. Some organizations have quantified these subsidies in the billions. A conservative estimate I've heard, if you take in all levels of government and all forms of subsidies, is that it's in the range of $4.8 billion a year. That's equivalent to job training 480,000 workers, if you look at what the Canada job grants provide for worker upscaling.

Absolutely, we need to invest in the things that will create good jobs and that also drive down emissions, and we know that it's not going to happen overnight. We know that there is a transition, but we need to be supporting those things that help move us in that direction.

I will just say that workers really need to be at the table. We talk a lot about investments and where we need to go, but workers have solutions to this. We need to be at the table helping to shape the plan across the economy, not just in oil and gas but sector by sector and right down to the workplace level.

I will argue that we need to invest in the things that we know build towards what we're looking for, including worker skills training and investment in modernizing the grid, all of those things, with workers at the table, making sure that we have the supports to get from here to there and ensuring that those investments come with the job streams so that we are creating jobs that support the economy and that support families and communities in where we know we need to go, towards a net-zero economy.

[Laurel Collins, NDP, Victoria, BC]

I have a follow-up to some of the comments in your opening statement.

You mentioned that big oil and gas companies are currently making record profits along with giving out CEO bonuses and share buybacks. That's at the same time these companies are receiving public subsidies.

The NDP recently proposed a tax on the excess profits these companies are receiving. Is that something that your organization would support?

[Larry Rousseau]

I don't want to keep repeating myself, but our organization is going to support anything that brings us to the table in the decision-making process. I've heard the comments from the Chamber of Commerce and from the industry side. We will be talking about workers. Everybody talks about workers, but no one is asking the workers what they believe is going to be the best way forward on this.

As far as exactly what the government is going to be putting on the table, that's where we want to be involved. That's where we want to work with the parties to say what we believe is going to be the best way forward. It cannot just be government working with industry. It has to be government working with industry and with the employee representatives to make sure that everyone's at the table.

When we look at specific measures, I cannot make a blanket statement on what you just asked. We have to look at the details. The devil is always in the details.

[Laurel Collins, NDP, Victoria, BC]

Thanks so much.

In addition to ensuring that workers are at the table, are there other ways that the government can ensure that the policies they're putting forward benefit both workers who are looking to transition and also those who are close to retirement?

[Larry Rousseau]

Absolutely.

Just transition means that.... We have a model already. We have health and safety committees in the workplace. Why don't we just introduce the same notion of having just transition committees in the workplace as well, where we are at the table?

That's one way we can get our voice heard and make sure we don't just go down that path of whether it's profitable or not profitable and boom—everybody's out on the street. It makes people angry. It makes voters make decisions that we've had a little bit of a taste of. We want to avoid going down that path.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

I will now ask Mr. Dreeshen to begin the second round of questions.

Mr. Dreeshen, you have the floor.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much, Mr. Chair, and thanks to all the witnesses.

One thing that was just mentioned is that industry needs long-term commitment. I think that really becomes the critical part.

If Canadian industry isn't competitive with its global counterparts for whatever the reason—be it labour, excessive regulations, transportation bottlenecks or taxation—the most common result is that it can't compete beyond its borders. We can manage here, but we can't compete beyond our borders or the investors go to more favourable countries to set up shop. We see what is happening with the commitment between Russia and China for 100 million tons of coal that's heading from one country to the other. Here we are looking at our part as the rest of the world changes. I think it's important that we recognize this.

If you have these products, but you then have to import it, the profits that could have filled our own government's coffers have instead filled those of competing nations. The benefits of all of the progressive labour practices we speak of, the environmental stewardship we are so proud of here in Canada and the human rights champions we always want to be part of lose their ability to be effective.

When it comes to Canada's natural resources specifically at this point in time, the anti-hydrocarbon activist narrative is that Canada should do all it can to dissuade us from advancing our world-class fossil fuel industry, not only from using it for our own needs but from being part of the global market. That's what I've heard today from some of the witnesses.

I'd like to ask Mr. Agnew from the Chamber of Commerce a question.

How do we get the message out there of the significance of Canadian energy for reaching the actual goals of net zero, when we see this bombardment of polar opposite views? They have made their commitment to it. How do we do that?

Needing that long-term commitment, how do we make sure that we don't have governments or whatever coming in and changing the rules as they go along, as was stated?