Evidence of meeting #11 for Environment and Sustainable Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was production.
A video is available from Parliament.
8:10 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
No, I'm not but I'd love to hear it.
8:10 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
It is billions of dollars, as we've said, and it is public funds from the Government of Canada, the Government of Alberta and the Government of Saskatchewan, and it does capture significant carbon. These are some of the best carbon capture technologies around the world. We do represent a large portion of carbon capture sinks in the world in Canada as a result of commitment from both public sector and private sector organizations in Canada, so thank you for the opportunity to ask that.
As far as the economic viability of the sector goes, if we continue to give more economic benefit to a neighbouring jurisdiction, the United States, because they're giving better economic programs to make sure that producing companies can continue to produce and provide an energy benefit to their citizens while at the same time developing technology that captures carbon and provides other environmental benefits to the world, do you think those companies will migrate elsewhere?
I'm sorry, that was a long-winded question.
8:15 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
We've already seen it, and I think the key of this question is that Canada doesn't operate in a bubble and the oil and gas industry doesn't operate in a bubble. If we think it's a fantasy that we're not going to have carbon capture in nine years, let me tell you about the fantasy of reducing global demand for oil and gas in the next nine years.
Are we better off? Do we believe that Canada has better ESG performance than Russia, than Iran, than Venezuela and indeed than the United States? By objective measures, we do. The question is do we want to have some control over how that gets produced and how it gets exported, not only on the environmental side, which shouldn't be the government's only consideration, but obviously on the social and governance side, which we've seen become such an issue in the last two months.
8:15 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
Absolutely we should be encouraging investment in Canada.
8:15 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
I have another question.
I was over at the International Energy Agency meetings last week and Australia made it very clear that in the last decade, OECD countries, the most developed countries in the world, have decreased their share of fossil fuels as a percentage of their energy mix from 79% to 77.9%, so a reduction of 1.1% of their energy production from fossil fuels over a decade.
As Australia would say to that point, it is time to actually look at how we decarbonize this sector as efficiently as possible and as quickly as possible as opposed to continuing to tilt towards other infeasible solutions at this point in time.
Do you have any comment there, Ms. Exner-Pirot?
8:15 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
Absolutely. It's even worse than that because we're having an energy crisis right now. People have not had the natural gas, the LNG, that they would have used instead and actually coal production is reaching record historical highs and emissions this year are reaching record highs.
The unintended consequences of saying that LNG is not a perfect solution so we can't use it at all, not only produced more, not only have fertilizer prices been at the highest they've been in history and creating food insecurity and famine, but also caused coal production to go up and emissions to go up and set us back in that respect by several years.
8:15 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Thank you, Mr. Chair.
Thank you to the witnesses for, as the chair has said, a good debate that we're having within committee.
The clerk is keeping notes and I'm sure we'll be able to sort this out at the report stage, but some of the numbers like $9 billion that we've just topped up, which was in addition to $100 billion that we'd previously spent, I think are fairly misleading this evening.
I want to go back to some of the basics with Dr. Exner-Pirot on market dynamics that create the need for subsidies. When markets are early in their development, the only way to scale and to get through the valley of death is through some external force or funding, quite often from federal governments and that's done around the world.
Could you maybe discuss the dynamics that we're in right now in terms of the transition to a cleaner version of what we're doing? Also, can you discuss when we might remove the need for subsidies, as we're saying right now that inefficient subsidies are to be removed by 2023? The price of oil is increasing again. The market should be able to handle some of its own investments. Could you comment on that?
8:15 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
I can. I favour small government, so when the oil and gas industry is making record-breaking profits, I think that they should be paying for a lot of the things themselves. There's no reason for the taxpayer to subsidize that. However, on things like carbon capture, where it is a new untested technology, where there are large upfront costs, competitors in the oil and gas world elsewhere aren't doing carbon capture and aren't reducing the methane in the way we are. When you're asking the Canadian oil and gas industry to do something at a higher standard and at a more expensive level, which makes their production more expensive and thus less competitive, that's when I think there's a role for the public sector to step in.
8:15 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Terrific. I can think of some parallel situations in mining when we were fighting the ozone layer. Nobody could afford the scrubbers that went onto the stacks. The global market had to come to some kind of conclusion on that, but in the meantime, we had to put some money into those solutions. The result was that we solved the ozone layer crisis back in the eighties.
8:15 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
Absolutely, and for things like electric vehicles, yes, it makes sense to subsidize chargers at this point. We can all agree with that. It has to make sense on the greenhouse gas emissions efforts also.
8:20 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Thank you. I was listening to Mr. Carrie's questions and also thinking that in Ontario, the automotive industry has had subsidies to get us into the position where all of the major manufacturers are now going to EVs or going to zero emissions vehicle production. That would not have happened with the market forces alone, given the low demand for those units, and now we're in a position to lead in that market. There's a parallel in Alberta.
8:20 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
Yes, and I will say that a lot of what they have described as subsidies was basically getting the oil and gas industry through that rough six months in 2020 when oil and gas prices did go negative. That helped them stay afloat in that short period, and now, obviously, they've been able to pay back those loans. Those aren't the cheapest loans. They would be the first ones they would have wanted to get off their balance sheets, but there was a good role of government in providing those loan guarantees in that exceptional black swan period.
8:20 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Right, and the commercial results will come. Then some of those loans will be repaid, some of them with different terms, which could then be determined to be an inefficient subsidy. We need an international definition of “subsidy” because we are in a global market, so it's important for Canada to work with Argentina to try to come up with some type of definition that all global producers can agree on.
8:20 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
Absolutely, and again, I just have to warn you that it should focus on the consumption of fossil fuels for burning it, for enhancing greenhouse gas emissions, not for using the magical molecule of hydrocarbon in so many other ways that positively impact our lives.
8:20 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Great, thank you.
On the complexity of this, we're also working on a cap. What is the cap going to look like? I know that the government is in discussions federally. We're working with the provinces and with the people who are involved with setting carbon pricing in the different provinces and territories to get to a cap on this. What's your view on caps?
8:20 p.m.
Senior Policy Analyst, Macdonald-Laurier Institute
In the G7, they just announced last week—Prime Minister Trudeau—that we call on oil- and gas-producing countries to act in a responsible manner and to increase deliveries to international markets. We can't have a cap on emissions without resulting in a cap on production, and guess what? The new development is that this cap would be imposed on LNG and blue hydrogen because the oil sands are already producing, so from an environmental perspective it makes no sense.
8:20 p.m.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you very much, Mr. Chair.
Ms. Exner-Pirot, I would like you to send the clerk the sources of information regarding the performance that you discussed a few moments ago with my esteemed colleague Mr. Duguid.
Mr. Gooderham, the appetite for carbon capture has grown by leaps and bounds over the last few years. Strangely, the most ardent proponents are those in the oil and gas sector, who are greedy, thirsty, for public funds.
From the beginning of the evening, we've been hearing the same thing about the effectiveness of CCUS, the program in relation to carbon capture, use and storage.
Can you put a figure on the failure of carbon capture, use and storage measures? If you do not have time to answer the question, I would ask you to send a further response to the clerk.
Thank you.
8:20 p.m.
As an Individual
Yes, I would be happy to do that. I have filed a submission with you, but on that question, I will supplement it.
I will note, however, that we mustn't overlook that in Alberta between 2008 and 2014 there was an immense program to develop carbon capture, and the plan was—according to the published plan—to reduce emissions by 139 million tonnes by 2050, using carbon capture. The program was abandoned in 2014 because the Alberta government of the day said that it was a science experiment and uneconomical, and the NDP government agreed. So that was the end of it.
We have in Alberta the only survivors of that immense program, the Quest project and one other. Quest captures 1.5 million tonnes. The government recently boasted that it captured four million tonnes between the time it was completed in 2015 and 2019, four million tonnes. In that time, the cumulative emissions, upstream emissions in the oil sands, were 300 million tonnes, so it captured a little over 1%.
So the statement that we have a lot of carbon capture in Canada, with respect, is unfounded. We have the Boundary Dam and as far as the build-out of this goes, anybody who is seriously informed on this might suggest that by 2030 we're going to be capturing maybe 20 million tonnes in Alberta at most.
8:25 p.m.
NDP
Laurel Collins NDP Victoria, BC
I have a follow-up question to that one.
You said that the objective of carbon capture and storage is to facilitate the continued expansion of oil production and to maintain high production levels through 2050. The government's recently tabled plan forecasts a 22% increase in production over the next eight years. They've also recently announced an increase in production of 300,000 barrels a day.
You've also pointed out that such a level of production is incompatible with keeping to 1.5 degrees and avoiding catastrophic climate change. We heard from a previous witness that carbon capture technologies have so far captured only a fraction of a per cent of Canada's GHG emissions and that's despite the billions of dollars in subsidies. You mentioned Alberta's example.
Can you speak a little bit more about the current carbon capture technology and the government's reliance on this?
8:25 p.m.
As an Individual
Well, it actually has very little. Several major projects were cancelled in the States—coal sites—a couple of years ago because they were simply uneconomical. There are, of course, long-standing projects in Algeria and one in the North Sea done by Norway, but the IEA, back in 2013, was expressing its disappointment that carbon capture and storage had not been picked up around the world. It still hasn't, and the reason is the cost.
Alberta had a huge investigation or study in 2015. It was published in May 2015 by the Council of Canadian Academies. It involved about 15 engineers who knew the oil sands, and their conclusion in 2015 was that carbon capture would never play a significant role in reducing emissions in the oil sands. Why? Because it's too expensive.
Then they went on and explained in more detail. Part of the problem is that you can build a new project, a greenfield project, that would possibly have some economics to it, but to renovate old projects is a major expense and that is what most of the production in Alberta is. The other problem was that for in situ production—which is now the typical production in Alberta—the economies of scale are too small to justify carbon capture in situ.
