Environment Committee on June 7th, 2022

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

For Mr. Leyburne, how does that compare to the number of direct jobs in the oil and gas sector?

[Drew Leyburne]

I think the direct number, from memory, is closer to 150,000, but I can get back to you with exact numbers on direct jobs.

As is the case with attribution of indirect, there are going to be some jobs that are both clean-tech jobs and oil and gas jobs, particularly when you are looking at indirect, in terms of how we classify it under the NOC codes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Absolutely.

One of the questions and ideas that came up before is about the challenge of commercializing in Canada. We have great research and innovation being done, but we've had challenges from a commercialization point of view. Ms. Hembroff mentioned some of the investment and incentive programs we have in place.

I'd like to ask Environment and Climate Change Canada what role they see for regulations and market-based systems for commercializing and deploying more clean tech within Canada.

[Judy Meltzer]

It's a really important question, because regulations are a critical part of that mixture of push and pull factors. Regulations create a very strong incentive and also demand for clean technologies.

I'll give one concrete example, since I recognize that we have the limited time.

One example is the forthcoming clean fuel regulations. These will create a strong incentive to bring forward clean technologies and low-carbon fuels across the life cycle, including large-scale projects in the upstream of oil and gas, for example, as well as low-carbon fuels and shifting end-use technologies.

I'll give one very concrete example. Federated Co-operatives Limited and their announcement to invest $1 billion in a renewable diesel plant is explicitly the result of this strong demand that is coming from the regulatory framework in this context. We know this works in conjunction with investments.

For example, NRCan's clean fuels fund ensures that there is significant support and de-risks investment in these technologies, and the regulatory framework has created a strong incentive and demand for these technologies. In this case, across the life cycle, carbon pricing provides a similar signal; it's technology agnostic and it's sending signals across the economy. Depending on the price point, it creates a strong incentive and levels the playing field for the clean technologies.

I'm happy to follow up with some other concrete examples.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

That's great. Thank you very much.

Another line of questioning that's come up is about renewable energy in Canada. Given that the provincial governments are in charge or have jurisdiction over developing and delivering electricity, it may not matter that we have world-class potential for solar and wind on much of the Prairies if the provincial governments don't want to pursue it.

My question is for Mr. Leyburne.

How will Government of Canada programs like the smart renewables program be able to incent more development and deployment of renewable energy in Canada?

[Drew Leyburne]

I'll say a couple of words and then turn it over to my colleague, André Bernier.

There are a few things at play. You mentioned the SREPs program, which is encouraging renewable power generation and interties, but there's also work with the Canada Infrastructure Bank and through the regional energy tables that Minister Wilkinson announced last week. I know that electricity interties and electricity generation will be major features of many of those discussions with provinces.

André, I'll turn it over to you.

[André Bernier]

Thank you very much.

A comment from the perspective of most provinces and territories, which are the primary decision-makers in this area, is that maintaining affordability is a top-of-mind concern. In that regard, renewables are increasingly competitive, if not competitive.

Always, from the perspective of a system, they need to be part of a system that also provides baseload. I don't know that there's a lot of resistance to their uptake; it's a question of what role they can play in the system.

Our programming does provide direct financial incentives for greater uptake of renewables, which also is helping to pull investments earlier in time, so that we see emissions reductions sooner rather than later.

The nature of the project affects the level of incentive. We were able to allocate the entire envelope for the smart renewables program in its first year of operation, so uptake has been very strong—there's no resistance.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you. We have one more round.

So that we fill up the time we have left, I'm going to add a minute to everyone's questions, so it's six, six, 3.5, 3.5, six and six.

Mr. Carrie, you have six minutes, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair. I think my question will be for Mr. Leyburne.

I believe you mentioned a program that you have—power off or something like that—whereby you're partnering with the provincial governments in regard to the grids and upgrading.

Again, coming from Oshawa, I have the automotive lean on the question. The auto industry is stating that we need to have one charging station for every 10 vehicles. If the government is mandating 40 million all-electric vehicles by 2035, how is that going to work with our grid system?

Currently, if we all had electric cars, how many cars could be plugged into the grid we have now without causing brownouts? Do you know?

[Drew Leyburne]

We could get back to you with the numbers we have.

This is a major question that electricity planners around the country are trying to figure out: the appropriate demand management peak. They call it peak shaving, trying to create demand for electricity when it's least demanded to try to smooth out the curves. The smarter grids get, the better they will be at accommodating these mass fluctuations.

We have to remember that electric vehicles, as an example, are not a one-way street. There are situations in which electric vehicles themselves can be used as part of a smart grid and give power back to the system. That is something that we are seeing around the world.

André, I might just pause to see if you have any further commentary on what planners are doing to integrate the changes in demand that we see because of electrification of transportation.

[André Bernier]

Thank you.

Our electricity sector planners across the country have a very strong track record of adapting the system to innovations. I don't want to minimize the effect of electric vehicles; it would be transformational. The key thing is making sure that they are given sufficient notice of what the demand will be, and then the supply will be able to fill in to help meet that.

The overall level of demand, so long as it's managed over time, is one where I think the system could make that transformation. It's a matter of treating it as a marathon more than a sprint.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Mr. Carrie.

Can you hold your microphone closer?

[Colin Carrie, Conservative, Oshawa, ON]

Is that better? I'm sorry about that.

André, I hear the word “could” from you. I'm concerned because of large investments coming to Canada. I am wondering if you could get back to us to let us know how many public charging stations we have. The estimation is that we're going to need four million.

My next question will be on the status of the hydrogen fuelling stations. The auto industry has given Canada a big “F” on that one. Eventually, if we're looking at clean tech, if we could convert our transportation industry over to something like hydrogen.... How are those talks going with the provincial governments?

Can you give me some numbers? How many hydrogen fuelling stations do we have in Canada now, and what are the projections for the requirements?

[Drew Leyburne]

We'd have to get back to you with the latest numbers of how many have been installed.

Over the last few years, the federal government has had numerous programs to support the deployment of charging infrastructure, both electric but also hydrogen charging. I know that with the electric vehicle infrastructure side of the green infrastructure program, this was a major feature.

Within my own RD and D, we funded a pilot project between Edmonton and Calgary, called the AZTEC project. It's running a hydrogen truck between the two cities. Most recently, in budget 2022, Transport Canada was given money to do more heavy- and medium-duty vehicle hydrogen demonstrations of that technology.

[Colin Carrie, Conservative, Oshawa, ON]

I'm very worried about timelines. The government is very aggressive. We have to have zero-emissions vehicles, I think, by 2035. That's just 13 years away. One truck going between Calgary and Edmonton right now.... I'm not really optimistic about that.

I would like to see the data. What have we achieved? We can do all of this talking about “coulds”, “shoulds” and “woulds”, but government puts these regulations in. Yes, they may create demand, but they can also create an exodus from our country. We have trade among North American partners, but if we don't have equality of regulations and costs, we may lose a lot of these jobs as well. I'm very concerned about that, coming from a manufacturing province.

Maybe I'll just change the topic to federal buildings. The federal government is a major real estate holder in Canada. Since 2015, I've spoken to different unions about the insulation side of things and how we could improve the efficiency of federal buildings. Could you give us an update on how the federal government is doing with its own real estate and improving the efficiencies of those buildings?

[Drew Leyburne]

I'm happy to jump in to start.

NRCan works really closely with all of the departments here in an effort that's led through the PSPC department and Treasury Board to green government operations. Anecdotally, I know that, overall, government is on track to meet its near-term targets for this decade, but a lot of the heavy lifting, as you note, will come in the outer parts of this decade, as we move towards 2030 and beyond. We have set the target for ourselves to get our house in order and to meet that decarbonization challenge ahead of target, and it's going to involve....

We can get back to you with the exact update. I think it's reported annually, through the sustainability plan.

[Colin Carrie, Conservative, Oshawa, ON]

Perfect.

If you could get the data to the committee, that would be awesome. Thank you.

Sorry, Mr. Chair.

[The Chair, Liberal, Francis Scarpaleggia]

It's all right.

Just before we continue with Mr. Longfield, I've been asked by the interpreters if we could just maintain a distance from our microphones of about one arm's length. That would be appreciated.

We'll go to Mr. Longfield, for six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair. Thanks for managing our time so well.

Thank you to the interpreters for the work that you're doing for us.

My questions are going to centre around the role that the federal government is taking in clean technology and the basis that these witnesses, thankfully, are giving us for our study.

I'm looking at the output-based pricing system fund, the price on pollution and the returning of money to provinces, as well as to Canadians directly, to try to spur on clean technology development.

Maybe starting with Environment and Climate Change Canada, could you comment on the role that the government is playing in trying to stimulate investments in clean technology through this fund?

[Judy Meltzer]

Briefly, the output-based pricing system, which is the federal pricing system for emissions-intensive, trade-exposed industries, applies in some parts of the country, and some provinces are implementing their own similar system. The actual pricing instrument itself creates that incentive. I'll also speak to your question about the revenue return piece.

Facilities regulated under this system have a limit on emissions. They have flexibility in terms of compliance, including through a credit market. If they out-perform the limit, they get surplus credits, and this creates a strong financial incentive and reward for adopting clean technologies. The cleaner they're able to produce their product, the lower their cost, the greater the recognition they get and the greater the financial incentives they get, for example, through clean technology adoption or improved energy efficiency.

Here I'll speak to the federal system specifically, because provinces return proceeds from carbon pollution in different ways. From the federal system, there remains the commitment to return all revenues generated to the jurisdiction of origin. This is done in different ways in different provinces. For the OBPS funds, where it is returned directly to industry, it is to be invested in decarbonization projects for large emitters, to help with that transformation.

We're still in the early stages. The compliance cycle for the output-based pricing system is an annual cycle. We're still in the process of setting up those funds to return that revenue. The expectation is that it's going to work in tandem with the output-based pricing system itself to further help de-risk and support investments in technologies to then further decarbonize. We'll have to follow up, as this—

[The Chair, Liberal, Francis Scarpaleggia]

Excuse me, Ms. Meltzer. Could you raise your microphone a bit?

[Judy Meltzer]

This program is still in the process of being implemented as these proceeds are coming online. The system has been implemented since 2019. It has a one-year compliance cycle and then time for regulatees to be able to comply. Therefore, we'll have to follow up with concrete examples, but we are returning to decarbonize industry in provinces where it applies. That includes Manitoba, Saskatchewan and P.E.I., where the federal output-based pricing system was in place.

[Lloyd Longfield, Liberal, Guelph, ON]

Great. Thank you very much for the detailed response.

In part of that response, you mentioned that we're in the early stages on a lot of this. Five years isn't a long time in the time of a planet, but in terms of the challenge we have to save the planet, it's an urgent thing that we're working on together.

Carbon capture and storage has been mentioned a few times this morning. We now host five of 21 global facilities in the world. We're number four for patents on carbon capture and storage. It's early stages on that technology, but it's something that is being used by the industry to look at how to get to net zero by 2050 and faster.

Could you comment very briefly on the role we're playing in trying to encourage external investments from companies such as Shell?

[Drew Leyburne]

Yes, Mr. Chair. I'm happy to start on this one.

NRCan is in the midst of developing a CCUS strategy for Canada that was foreshadowed last year. In budget 2021, we received $319 million to address some of the RD and D challenges related to CCUS, including bringing down the cost and broadening the application to technology. We know that it has had a major impact on reasserting Canada's global leadership in the CCUS space. As you said, we have a 20-year head start vis-à-vis most countries, with one of the world's first projects being initiated in Weyburn-Midale in 2000.

The NRCan work on the strategy is a cross-departmental effort. As you've heard from some of my colleagues, the net-zero accelerator, the Canada Infrastructure Bank, which was given new authorities to deal with CCUS in the most recent budget, and other funding programs can also contribute to this.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you. I want to sneak in. I think you got us to what I needed.

I have only 30 seconds left. Maybe you could continue on with the Clean Growth Hub and how we're working across departments to try to address the horizontal issues of trying to coordinate things like carbon capture and storage.