Environment Committee on April 26th, 2022

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

My first question is for Mr. Cosbey.

In our last panel we heard a bit about how Canada's regulatory framework has been captured by the fossil fuel industry. The government has met with oil and gas companies thousands of times, but refused to meet with any of the 400 experts who collectively called on the government not to fund CCUS. You mentioned that we have two paths—to either regulate the industry and get fossil fuel companies to pay for reducing their own pollution, or to make taxpayers pay for it.

Can you speculate on why the government continues to choose a path where it hands over public dollars to profitable fossil fuel companies?

[Aaron Cosbey]

I can speculate. Obviously, you would have to ask the government for a definitive opinion on that, but my speculation is that it's political expediency. It's a way to have your cake and eat it too, or so they think. However, it is short-term thinking. The idea that you can meet your Paris Agreement commitments and have a healthy economy by subsidizing a solution like CCUS ignores two facts. One is that if everybody did that, if we did it the world over, you're only solving 20% of the problems from fossil fuels. The other 80% occurs when you burn those fossil fuels in generation facilities or cars. That's where the real pollution happens. So you haven't solved that.

The other problem is that you can't imagine a future in which you chug away happily producing the same level of fossil fuels we're producing now, plus 2030.... In contradiction to what a previous witness said, there is a peak. Even the Canada Energy Regulator says there's a peak by 2032, followed by continuing demand—and that's based on assumptions that I would question. I would say it's coming even earlier than that. That implies a disaster for the Canadian economy, if we allow ourselves to continue being so dependent on the oil and gas sectors.

[Laurel Collins, NDP, Victoria, BC]

Thank you so much.

Can you describe Canada's progress on phasing out fossil fuel subsidies and how this progress might compare with that of our international peers?

[Aaron Cosbey]

Our performance in the G20 peer review process has been abysmal and is an international embarrassment. There have been three peer reviews that were conducted before the current one, which we're undertaking with Argentina, all of which were concluded in two years or less. We started ours over four years ago and there's been no progress since then. The facts speak for themselves. We have not progressed well by international benchmarks in the process of phasing out our fossil fuel subsidies, nor have we progressed well on the important question of trying to define what is an efficient or inefficient subsidy, which is crucial to our commitment.

[Laurel Collins, NDP, Victoria, BC]

Thanks so much.

We heard in our last panel that Export Development Canada is not not familiar with well-established and widely accepted international definitions. Can you just quickly talk about the benefit of Canada adopting a broad internationally recognized definition of a subsidy and what you think about Export Development Canada's claim they're not familiar with that?

[Aaron Cosbey]

There are two things on that question. One, we have an internationally accepted definition of subsidies. It's the WTO definition. It is not just used by the WTO, of which Canada is a member, of course, but also by the OECD in compiling its statistics on fossil fuel subsidies and by the IEA as it compiles its statistics. It's used as an indicator for the sustainable development goal 12.1, which benchmarks international achievement of fossil fuel subsidy reduction. This is an internationally accepted definition. That's one point.

The second point, though, is that I would agree with the sentiment that came out in the last set of discussions. It doesn't matter so much. The really important question is not, is this dollar spent on a subsidy? The really important question is, is this dollar spent in a way that is a good use of public funds? The criterion for that is not the same as whether it's a subsidy or not; the criterion is whether it is in line with our Paris Agreement targets. Is it an efficient use of funds, considering the target? Are there better ways you could use that money and are you contributing to the risk of stranded assets? Those are the kinds of criteria we really need to be worrying about.

[Laurel Collins, NDP, Victoria, BC]

When it comes to the $2.6 billion for the CCUS tax credit, Mr. Cosbey and Ms. Chaloux, just quickly, do you both consider that to be an inefficient use of public funds?

[Aaron Cosbey]

Efficiency depends on what your goal is. If your goal is employment retention, if your goal is future prosperity for Canadians, if your goal is—

[Laurel Collins, NDP, Victoria, BC]

The goal is keeping global warming below 1.5°C.

[Aaron Cosbey]

No, because 80% of the emissions that come from the gas that's extracted are emitted in the process of combustion in cars and the fossil fuel gas generation plants.

[Annie Chaloux]

I fully agree with what Mr. Cosbey said. Clearly, any subsidies to this industry, even for CCUS, allow for the generation of even more greenhouse gas emissions and prevent the transition in an industry that drastically needs to transition.

[Laurel Collins, NDP, Victoria, BC]

Thank you.

Mr. Chair, how long do I have?

[The Chair, Liberal, Francis Scarpaleggia]

You have about 35 seconds.

[Laurel Collins, NDP, Victoria, BC]

Very quickly, can you, Mr. Cosbey, talk about some of the policies that would accelerate the development of clean renewable energy initiatives?

[The Chair, Liberal, Francis Scarpaleggia]

You have 20 seconds, Mr. Cosbey.

[Aaron Cosbey]

Sure. Let's invest in diversifying the Alberta and Saskatchewan economies, using the resources we have: the project management capacity and the natural resources.

Let's focus on what you can do with bitumen other than burning it in cars. You can make carbon fibre, you can make asphaltene or you can make lithium out of the by-products. There are a million ways of using—

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We have to move on to Mr. Mazier for five minutes, please.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you, Chair.

This is for the IISD and Mr. Cosbey.

You published a 2021 report, “Federal Fossil Fuel Subsidies in Canada”. In that report, you listed the following as fossil fuel subsidies: $6 million for “Indigenous Natural Resource Partnerships”, $2.37 million for a “diesel generating station” in a northern Ontario community and various “Indigenous Services Canada investments in natural gas and diesel projects and electricity price support for Indigenous communities”.

We've heard at this committee that these investments are very important to some communities. However, you also stated in your report that “fossil fuel subsidies are not consistent with net-zero commitments”.

Do you see any concern with the impact that eliminating these investments, which you have defined as subsidies, will have on Canadians in the name of net zero?

[Aaron Cosbey]

Thank you for a careful reading of our report, during which you will have noted that we support some types of fossil fuel subsidies. It's a matter of record, which I repeated in this committee testimony. There are some fossil fuel subsidies that may be necessary, and I consider subsidies to energy in remote and northern communities to be part of those, although at the same time we should be sinking as much or more money into diversifying the energy sources in those communities away from diesel generators.

This comes back to my point. It's not a question of whether it's a subsidy or not. Some subsidies are good. Some subsidies are bad. It's a question of whether it's a good use of public funds.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you.

Mr. Golinowski, global energy demand is rising and countries around the world are begging for clean Canadian oil and gas to displace Russian energy. Do you believe that it is better for the global environment to be supplied by Canadian oil and gas?

[Craig Golinowski]

I do unequivocally believe that we have no alternative to the use of oil and gas to supply energy for the population of eight billion people, and that we need to capture the emissions from the use of that oil and gas and sequester it to meet our net-zero goals. Power generation, cement production, steel production and fertilizer production are all based on fossil fuels, and so too are renewables. Solar panels are made from coal. Wind turbines are made from coal. This is just a reality.

If we are unable to accept that proposition and we constrain the ability to supply reliable energy, then Putin can weaponize energy. He can weaponize food, which is what he's doing by restricting exports of fertilizer.

This idea that we can just simply eliminate fossil fuels will result in a lot of problems, so Canada's role is to be able to deliver energy while we reduce our emissions using a proven technology, nascently deployed—proven, though. We need to establish that carbon capture and storage is a global-scale solution to emissions.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

That's a nice segue into my next question for you. I see that your organization has a lot of research on carbon capture, utilization and storage. Do you believe the government needs to invest in this technology for the sector to succeed in Canada?

[Craig Golinowski]

The way we think about this basic problem is that it's like any other form of utility infrastructure—for example, water infrastructure or sewage infrastructure—where value needs to be put on an avoided emission. The government is the only entity that can do that. It's started to do that with the carbon tax.

Basically, the investors in the carbon capture equipment and that infrastructure need to know that there's a rate of return for their invested capital. We can look at models like municipal utility infrastructure and how we reduce the cost of capital so that every dollar of public money that goes into this on the investment tax credit achieves the largest number of tonnes. We have to reduce the risk as much as possible for the capital providers that invest in this space.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Good. We do need to invest in it.

Have there been any barriers that you think...? I'm wondering if you have something top of mind that you can tell the committee, such as, “Here—if you focused on this, this would make your job and our job a lot easier in getting this project moving forward”.

[The Chair, Liberal, Francis Scarpaleggia]

You will have to keep that answer for another question, Mr. Golinowski.

Go ahead, Mr. Duguid.