Environment Committee on March 31st, 2022

[David Gooderham]

I'll just focus on the case. Carbon capture and storage has been put forward here to allow us to continue to increase production and allow us to reduce upstream emissions. What I'm saying is that, if we're going to increase production, we are going to miss the 2050 target. There's no doubt about that.

We're a major supplier and, if other countries do it as well, we're going to miss it. I pointed out that the current carbon concentration level is 4.13. It's going up 2.5 a year, and once we clear 4.28, there goes 4.30. We've passed the 1.5 limit, and when we cross 4.50, we pass the two-degree limit, and that will happen by 2035 at the rate we're going.

We're just talking around this issue, but this is, in fact, the thing that's going to kill us.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Madame Vignola, you have the floor.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Ms. Exner-Pirot, I'd like to ask you quickly if it's possible for you to send the clerk the data, the information, and the sources of information in relation to all the answers you gave to Mr. Duguid's questions a few moments ago.

Mr. Gooderham, I would like to give you a minute to complete the idea that you talked about with my colleague Mr. Seeback. Then I will ask my questions.

[David Gooderham]

The point I was seeking to make is that I understand the carbon leakage argument. I've been following it, like all of you have, for the past 12 or 15 years.

We've never managed to negotiate any agreement with other countries to stop increasing. In fact, we massively increased our production, and now we have, in effect, nine years left to achieve a 50% reduction. There is no argument about that; that is the science. We're not going to be able to do that if we continue increasing oil. It's absolutely clear we won't; therefore, at this moment, to say, “Well, if we stop producing more oil, other countries will just keep producing it” cannot be a sufficient answer because it is suicidal. Therefore, we stop increasing our production, and we start trying to get other countries like Norway and England to agree to do that, and we then move to tariffs and other systems to block out oil from countries that are continuing to increase. We either do that or we are killing our children.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Gooderham. I understand that we need to be a role model and set a good example in reducing emissions.

My next question is this. The Canada Energy Regulator published its scenarios in December 2021, in the report entitled “Canada's Energy Future 2021”. In addition, the board presents scenarios that forecast a 19% increase in oil sector production until 2032, followed by an equivalent decline between 2032 and 2050. An equivalent decline means a 22.6% decline.

Six months earlier, more than 20 specialized economists and climate experts asked the Prime Minister to ensure that the regulator incorporated the recommendations of the International Energy Agency report into its scenarios. We are still waiting for these scenarios.

That said, I am concerned about a possible conflict of interest, as the regulator is modelling a future that in no way reflects Canada's international commitments. What do you think is going on?

I'd like to hear from you on that, for about two minutes.

[David Gooderham]

The report on December 24 of the Canadian Energy Regulator, as it's now called, was decisive because it embraced, for example, this great commitment to net zero and relying on carbon capture and storage. It is a lengthy report that we all read. It put forward something called the evolving scenario. You'll be familiar with that. It was an alternate, slightly lower level of oil production for Canada, but still a substantial increase.

It then observed explicitly in its report that even that scenario would not get us to net zero. It would not keep us within 1.5 degrees and it did not go on to tell us what kind of trajectory for oil production for Canada would do that.

That was in November 2020. In July 2021, about 24 of Canada's leading energy economists and experts on climate called on the CER to develop a scenario that would align itself with the IEA's net-zero scenario for oil production. It would be a line going down like that to some degree. Again, the CER issued a report on December 9 of this past year that again didn't tell us what that scenario might be.

The minister finally, on about December 21, directed, if you will, the CER to proceed and do that modelling, but we still don't have it.

I put this to the committee, since you're calling the government to account in Parliament. How can the government be setting these major plans, like increasing oil production, but at the same time doing massive carbon capture and storage, without us knowing what kind of trajectory for our oil production would be consistent with staying within 1.5 degrees?

We just don't know.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Why are they doing this? Why don't they get out of the oil business and think about viable and responsible long-term solutions for future generations? What is holding them back?

[David Gooderham]

I can't answer that better than you can.

The NEB, which was the same organization, did the inquiry into the TMX pipeline in 2016. That was, essentially, the key pipeline project that would commit us to this growth we're now seeing in oil production.

There was an opportunity in 2016 to have the NEB examine whether the projected increase in Canada's oil supply could be consistent with the 1.5 degrees target. The Liberal government at the time could have directed the NEB to do that, but they didn't do that.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll go to Ms. Collins, who may invite you to continue your line of thinking, but that's her decision.

[Laurel Collins, NDP, Victoria, BC]

I do have some questions for you.

The Liberal government is spending nearly two and a half times the amount on Trans Mountain pipeline as it is on its climate plan that it just unveiled this week.

The government continues to kick the can down the road, subsidizing unproven carbon capture technology instead of investing in renewables. We heard a report that the government has subsidized fossil fuels at 14 times that of renewable energy projects.

Would you agree that subsidies targeted to reduce emissions in the fossil fuel industry would be better directed to help fund the renewable energy transition?

Can you give a frank assessment of what this government has done over the past six years and the direction it is headed now?

[David Gooderham]

I certainly think the subsidies should be withdrawn from the industry. Concurrently with that, the applicable carbon price under the output-based system should be substantially increased. Then we will begin to see a decline in our production. We have the tools to do it.

The Supreme Court of Canada has said that the federal government has that power. There is no reason why the performance standard is set at such an absurdly high level that they pay a carbon price on a fraction of their emissions. That's just the upstream emissions.

We have the tools. Remove the subsidies, save for helping with transition of communities, and accept that this industry now has to go into a declining trajectory, however gentle that may be.

That's my answer to your question. Remove the subsidies.

[Laurel Collins, NDP, Victoria, BC]

Thank you so much.

Just to follow up on that, Canada's biggest emitters are paying the lowest carbon tax rate, about 1/14 of the full carbon price. Maybe just a quick yes or no: Would you consider that a fossil fuel subsidy?

[David Gooderham]

Definitely, it's a subsidy by any measure.

[Laurel Collins, NDP, Victoria, BC]

What policies and funding measures would help accelerate the development of clean renewable energy initiatives?

[David Gooderham]

Well, that's really beyond.... I don't have an expertise in that, but what I do know from having watched this for the past 10 or 15 years is that we have, and in particularly in Alberta, the wind and solar opportunity to have the biggest clean energy industry in North America. I think that the incumbent industries have got a stranglehold on the policy process.

To illustrate that, I will point out that, when the CCUS thing emerged about 12 months ago, it didn't emerge in a government policy statement; it emerged in the pages of The Financial Times, Bloomberg and the financial sections of newspapers reporting on interviews that their CEOs were giving. Then our government responds through other newspaper interviews and says, “Oh, we'll sit down and talk to them about a $75-billion subsidy program”.

There's still not a government document that makes the case for carbon capture and storage either on the emissions basis or any other. It's all coming from the industry.

[Laurel Collins, NDP, Victoria, BC]

Thank you so much.

In 2020, Export Development Canada provided $5 billion in loan renewals for financing for the construction of Trans Mountain pipeline.

Do you think that amendments to the Export Development Act need to be made? If so, do you have a sense of what they would be and how they would be consistent with the United Nations Declaration on the Rights of Indigenous Peoples?

[David Gooderham]

On the rights of the indigenous people, I might say that the big thing that's impacting the rights of indigenous people is the TMX pipeline itself. We've heard many crocodile tears on this about not consulting with aboriginal groups and about taking away opportunities to develop the oil industry, but the brazen lack of consultation on the TMX pipeline was a major error.

I think that pipeline should have ceased when it was no longer commercially viable. That was clear back in 2018. It's now clear. If we look at the CER's own evolving scenarios now for oil production, they themselves admit that, after 2032, when our peak production arises, that pipeline, TMX, will be surplus capacity.

[Laurel Collins, NDP, Victoria, BC]

Thank you so much.

You mentioned that the IPCC has put a target of a 50% global reduction needed to reduce our emissions in order to ensure a livable planet. Can you comment on the adequacy or inadequacy of the government's current target?

[David Gooderham]

As for the target, I read the report two days ago, and it looks like they've got a target of a 40% reduction—pretty sketchy.... It hasn't advanced much since the December 11, 2020 numbers, which were very similar.

They're still promising, in the case of the oil and gas sector, an incredible 80-million tonne reduction of emissions by 2030 below the current level. That simply cannot be accounted for. There's no way carbon capture and storage on that level is going to be in operation by 2030; it's a fantasy.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

I hate to stop you there, Mr. Gooderham.

We now go to the second round, a five-minute round, and Mr. McLean will kick it off.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you very much.

Madame Exner-Pirot, I'd really like to hear more about the comparability of the 45Q regime in the U.S. versus what we are proposing here in Canada, either enhanced oil recovery or not. Can you tell us if the 45Q includes enhanced oil recovery in the United States?

[Dr. Heather Exner-Pirot]

This isn't my area of expertise. Energy security and global energy demand is, as is indigenous resource development. I can tell you that, yes, it includes enhanced oil recovery, and I assume you know that there are very good environmental reasons in terms of land impact to do enhanced oil recovery.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

Can you elaborate further on the flow of funds for research and development and the technology jobs associated with this that have migrated from Canada to the United States since 2018 when they came up with the 45Q regime to develop technologies to enhance the carbon capture technology they use now in the United States?

[Dr. Heather Exner-Pirot]

I wouldn't have the specifics. You probably have the specifics in front of you. But as you're very familiar with, there has been outflow of foreign direct investment out of Canada for oil and gas, for mining that we need for critical minerals, for everything because of our very long and arduous regulatory system. We need all those things to make renewables also, so we need to reconsider all the things that we do to attract foreign direct investment here.

[Greg McLean, Conservative, Calgary Centre, AB]

Are you familiar with the amount of funds, government and corporate, that have been invested in developing this technology over the last decade in western Canada?