Environment Committee on Sept. 23rd, 2022

[Dr. Brendan Haley]

I think the key thing that could be really transformative is coordinating the demand on the supply side and having them work together better.

For instance, we need to not just retrofit every building at a time; we need to retrofit thousands, millions, of buildings. By aggregating a bunch of those buildings together, you all of a sudden have reshaped the nature of demand to open up a negotiation with manufacturers and other solution providers in your market to say, “If we can deliver all this demand, you can now have that certainty to change your manufacturing process, to perhaps manufacture certain types of products in Canada that aren't done now or to come up with solutions that nobody has thought about before to solve the problems we have.” Matching that supply and demand is really where we need to go.

Initiatives under what's called the greener neighbourhoods program and the retrofit accelerator initiative that have also been supported are starting to get there. Right now those are mostly at the pilot project stage, and they're quite restricted in terms of what kinds of buildings they are functioning. A larger scale, more flexible approach to really thinking about coordinating demand and supply could really help clean technology in the country.

[The Chair, Liberal, Francis Scarpaleggia]

There's time for a 15-second comment, Mr. Weiler.

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

How do you ensure that you're promoting the right type of retrofit over a large scale?

[Dr. Brendan Haley]

I think you need to find what a net-zero retrofit means, and we haven't done that yet.

[The Chair, Liberal, Francis Scarpaleggia]

Mr. Trudel, you have the floor for six minutes.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Thank you, Mr. Chair.

I too want to thank all the witnesses for being with us today.

My first question is for Mr. Durany. I'm curious about green hydrogen.

Mr. Durany, you held a conference on green hydrogen in 2019, and you say on your website that hydrogen is currently in a marginal position. However, recent technological advances suggest quite a promising future for green hydrogen as a factor in the energy transition. As you've no doubt seen, green hydrogen has reemerged as an issue in the provincial election campaign.

Sectoral experts have identified some obstacles to the development of this fuel. In their view, governments are unaware of hydrogen's potential. As a result, governments are disinclined to develop the sector, innovation support programs are unsuited to hydrogen production projects and there's considerable government inertia on the issue.

I have two questions for you on this.

First, do you think the Canadian government adequately supports Quebec's green hydrogen sector, in a manner commensurate with its potential?

[Gabriel Durany]

Thank you, Mr. Trudel.

That's a very good question. AQPER looks to the Quebec government first but is always in touch with the federal government. It's extremely important that the country explore the green hydrogen issue. Let me explain.

A review of the hydrogen and bioenergy strategy has begun in Quebec, and the Quebec government announced it at AQPER's last conference. The idea, first of all, is essentially to use hydrogen to decarbonize various industrial sectors in Quebec. You take Quebec green electricity, switch it over to hydrogen and then use that hydrogen in the form of an energy product. As you know, hydrogen can be used to form many types of molecules that meet needs in various industrial sectors.

This is something that AQPER supports. AQPER members that produce hydrogen, or are preparing to do so, combine it with other types of molecules to make more complex molecules: biofuels, low-carbon-intensity fuels, next-generation renewable natural gas, or RNG, methanol, ethanol and so on. These molecules are often used in industrial sectors such as transportation.

Is Canada adequately supporting hydrogen? Here's my answer to that question.

First, until you understand the uses and how those uses are sequenced—I'm talking about the technological roadmap—you may be wrong about the type of incentive you should provide.

Second, Canada must consider this in the context of its Canada-Germany accords and of the current calls for help from our European partners regarding gas energy projects, for reasons you're aware of.

If we don't see a major change in attitude toward meeting the urgent need to encourage a sector like green hydrogen to provide an export energy product for the use of our international partners, then we may be missing a major opportunity for our industry. The demand is huge. Offtake agreements are the thing. For us, they're the whole ball game.

Mr. Trudel, I'd like to say two things. First, our roadmap very clearly outlines, in four stages, the type of incentive needed to lift the hydrogen sector. It's a marginal sector right now, but it could break out very quickly.

Second, given the current international situation, we should all be extremely vigilant and recognize the rapid paradigm shift respecting the position of hydrogen in the global energy environment.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Thank you very much, Mr. Durany

Apart from green hydrogen and hydroelectricity, what renewable energy in Quebec is ready to be deployed? What major advances can we expect in Quebec over the next few years, with or without government intervention?

[Gabriel Durany]

That would be electrical energy, by which I mean renewable electricity. As you know, we talk at length in our brief about bioenergy, which is also an important aspect.

If I correctly understand your question, Mr. Trudel, we're talking more about electricity in this case.

In Quebec, and in many regions of Canada—not just Quebec—wind energy is the most reliable one out of the box. It's readily deployable, at more than acceptable cost, and costs to acquire it are declining. At AQPER, we promote abundant, modular wind energy that meets the needs of our major industrial sectors, or future green hydrogen production.

There's considerable potential in eastern Quebec, but not just in that region. Its potential in the Maritimes is enormous. So potential, technology and viability are all there. Most of the provinces have developed the wind energy sector.

When we looked at Dunsky Energy's techno-economic modelling, which was commissioned by the Quebec government, we established wind energy as our focus.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Mr. Durany. Your time is up.

I now give the floor to Ms. Collins.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

My first question is to Mr. Haley.

First, how big a role does energy efficiency and energy conservation play in Canada's efforts to reduce our greenhouse gas emissions and meet our climate targets?

[Dr. Brendan Haley]

It's a good question.

You're catching me without specific numbers. The potential study that was done for Canada said we could save about 40%, I think, of our energy needs by 2050, which could be met by energy efficiency, by saving energy instead of supplying it, I believe.

[Laurel Collins, NDP, Victoria, BC]

Thanks so much.

Leaving aside the opportunities for future innovation for a moment, how would you say we are doing when it comes to energy efficiency technologies that we have available right now?

[Dr. Brendan Haley]

I think there are multiple technologies, but I think maybe the innovation in energy efficiency that's needed is around specific technologies like cold climate heat pumps. A lot of it is finding the process to really scale up energy efficiency.

Some of that could be technologies like software to better coordinate retrofits over a number of buildings, for example. Those are the types of more process-based technologies that I think are important and actually might be easier for Canada to show leadership in.

[Laurel Collins, NDP, Victoria, BC]

Great.

You mentioned in your opening remarks that we need to expand building retrofits by five to 10 times their current rate if we are going to achieve net-zero emissions. You talked a little bit about a kind of aggregate approach. What else could we be doing to scale up at the pace we need?

[Dr. Brendan Haley]

I think the government needs to set a clear goal, including what net-zero emission performance would look like for a whole bunch of different building sectors. Then they need to target any incentives, any financing and any policy towards meeting that goal. Right now we're saying that if you save energy, that's good, but we need to answer the question of how much energy and how much greenhouse gas emissions can be saved.

A big part of that is the government leading with enough public investment to catch attention and to say that the markets here are going to be transformed. This is an area where the private sector needs to pay attention. I don't think we've done that yet. It's very focused on one building at a time instead of saying that this is a big mission that you should be paying attention to.

[Laurel Collins, NDP, Victoria, BC]

There's a huge opportunity for building retrofits in creating jobs in Canada. Can you comment on the job potential and how we can best support workers in this area?

[Dr. Brendan Haley]

I'm again blanking on the numbers, but certainly the jobs created per million dollars spent for energy upgrades tend to be much higher than in most other initiatives in the economy.

I think part of it is that this is an area for good jobs, especially good jobs in the trade. A lot of the sectors, such as high-tech sectors or even manufacturing sectors, are not actually providing the jobs that we need in the economy anymore. We really need to start focusing on smaller businesses in the trade. What is the policy that can help some of the contractors involved in energy efficiency actually change their business models to be more productive and be able to pay higher wages?

It's helping some of those contractors to not just install the exact same furnace as the one you had, but to provide a fuller spectrum of services that include insulation, air sealing, comfort, humidity control. I think those are the types of business models that policy can promote to provide higher-wage jobs to Canadians.

[Laurel Collins, NDP, Victoria, BC]

You spoke briefly in your opening remarks and also in your comments to Mr. Seeback about energy savings for low-income Canadians. The cost of everything is going up. I think the cost of living is really top of mind for a lot of people who right now are wondering about how they're going to afford to pay their bills.

Can you speak more about the benefits of targeting energy savings to low-income Canadians?

[Dr. Brendan Haley]

As I said, these are obviously the people in need. These are obviously the Canadians who are not going to do the retrofits on their own unless they receive some help. They're highly vulnerable to energy price increases that are happening because of global factors and because of the carbon price. I think it's a major policy gap that we really need to fill.

Some of the big benefits are health benefits. People who are not heating properly get issues with mould and issues from living in colder temperatures. A huge opportunity and often a huge benefit of upgrading low-income homes are the health benefits and the ability for seniors to live at home longer. Those are some of the non-energy benefits we get out of that.

The other thing I might mention is that some of the technologies I talked about are really relevant to low income. For instance, insulating from the outside instead of the inside allows tenants to stay in the building while the retrofit's being done, which is key.

In dealing with inflation, there are opportunities in a low-income program that don't exist in other programs to coordinate a whole bunch of buildings together—

[The Chair, Liberal, Francis Scarpaleggia]

Unfortunately, we're out of time. We'll have to go to our second round.

Mr. Mazier, you have five minutes, please.

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

Thank you, Chair.

Thank you to the witnesses for coming out this afternoon.

Mr. Golinowski, my questions are for you today.

You mentioned in previous testimony at this committee that “the United States doesn't hate industry. They want industry to be productive”. I've heard from a lot of business leaders who believe that the current government is hurting Canada's business environment. Were you implying that Canada hates industry?

[Craig Golinowski]

I think my observation on the United States is that at the state level and the federal level, there's an acknowledgement of the importance of things like liquid natural gas and significant manufacturing capabilities that require energy-intensive steel production and petrochemical production. I think what we're seeing today in Germany is effectively an implosion of German industry. What's happening in Europe is a precise example of what happens if we are insufficiently supplied with fossil fuels. Zinc smelting, aluminum smelting and fertilizer production are substantially shut today in Germany and in Europe.

These ideas that we somehow are able to replace fossil fuels in industrial production or that industrial production itself should be punished as a polluter are being demonstrated in Europe, and they don't work.

In the United States, the section 45Q tax credit for carbon capture is a strong economic signal that the United States in fact wants heavy industry to remain in place and that the United States government will effectively pay for the entirety of carbon capture. These are clear differences in philosophy.

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

Thank you.

I'm hearing that clean-tech businesses are leaving Canada to restart their operations in more business-friendly countries. We've heard consistently that although Canada invests in research and development of clean tech, we fail to commercialize this technology.

How big an issue is this, and what can government do to address it?

[Craig Golinowski]

The United States is a massive market. That's one advantage that Canada just won't ever be able to replicate, but one item that I'm suggesting is clear certainty on carbon value and having a contractual approach so that if a future government elects to change the carbon price, it is underwritten contractually and bank loans and large-scale equity investments can be made in projects that are based on these carbon prices.

I think Canada can observe what's happening in the United States with the Inflation Reduction Act and the magnitude of those incentives, which apply to renewables and hydrogen and across many of the energy transition technologies. Canada can take a lesson on having more certainty. Fundamentally, the rate of return on these projects needs to be observable by the market and the financial risks need to be minimized as much as possible.