Environment Committee on Oct. 4th, 2022

[Robert Saik]

My concern with this whole thing as an agronomist is, “30% from where?” My understanding is that the coefficient they're using to calculate the reduction of 30% has a minus-30 and a plus-40 error in the standard deviation of the coefficient. This means that with just the coefficient, we could be at minus-30 already.

Nobody wants to release more nitrous oxide than needed into the atmosphere. That includes Canadian farmers. As I said earlier, between soil testing, variable rate technology, nitrogen inhibitors and the split application of nitrogen, we're doing all of these things. What else are we supposed to do?

If you're going to try to achieve this target, the only way to do it is through an absolute reduction in fertilizer, which is absolutely ridiculous. The world needs more Canada right now, not less Canada.

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

Are there technologies that you're currently working on in farming and agriculture in particular that would be useful for this study?

[Robert Saik]

There are all kinds of remote-sensing technologies, as well as bioengineering down the line, such as what's happening in Argentina with a company called Bioceres, which is producing wheat that's resilient to drought and saline soils. That's an example of genetic engineering moving us in the direction of more sustainability.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll go to Mr. Weiler for three and a half minutes.

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

Thank you, Chair.

Thank you, witnesses, for joining us today.

My first question is for Mr. Thomson. What role do you see the output-based pricing system and the clean fuel regulations playing in reducing emissions from the transportation sector and leading to fuel switching?

[Ian Thomson]

The clean fuel regulation is a huge benefit. It will take time to come into effect. These regulations don't have an immediate effect. We anticipate that mid-decade is when we'll probably start to see incremental actions that go beyond current provincial actions in the CFR. It's very important.

The output-based pricing system is more intended to address fixed facilities. It's more of a facility-based one. The federal carbon charge is the other side of the OBPS and it's the one that applies to fuel, hence our recommendation that the Greenhouse Gas Pollution Pricing Act should align with international practice, which is to fully waive biofuels from a carbon charge.

Right now, anything that's above 10% of renewable content in gasoline or 5% in diesel is exempted. That's a lot of fuel under 10% for gasoline and 5% for diesel that's currently being taxed by the government. There's no reason to tax it. It's not best practice internationally. In fact, it's not even a common practice.

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

Thank you for that.

You mentioned, in some detail, some of the concerns you have about competitiveness with the IRA coming into effect. Obviously, this is something that Canada needs to look at very closely. What level of urgency do you see with some of the measures you proposed to this committee, and otherwise, that needs to be taken into account in how we're going to respond with measures in Canada?

[Ian Thomson]

We are also making those recommendations in our pre-budget consultations submission.

There is urgency to it. I mentioned that these really troubling provisions come into effect in 2026. The kinds of facilities that produce these fuels take half a decade to build, and they're half-a-billion-dollar projects. If there is a looming threat to your market in two or three years and you don't know whether you'll have it resolved under a trade action, you simply won't go ahead with the project. It's going to have a chilling effect right now, hence our urgency to understand how our government can match the IRA provisions and provide parity for project developers here.

It appears to be, just from my conversations, a concern across the board. I anticipate that you'll hear from both the conventional and non-fossil sectors.

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

If we don't see those investments take place in Canada, what impact do you see that having on Canada's ability to reach its emission reduction targets by 2030, and get to net zero by 2050?

[Ian Thomson]

It's conceivable we could still meet them. We would be heavily reliant on imported product. With global supply chain issues and the general concerns about energy security, I don't think any of us would perceive that it's in our best interest to be import-reliant for our clean fuels. It will actually retard it.

You can't sustain support for clean fuel technologies—and clean technologies, period—unless Canadians can see themselves benefiting from jobs or investments. They want to see it in their community. They don't want to be importing it and paying for it.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Ms. Pauzé, you have the floor for two minutes.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you, Mr. Chair.

I have one question for Ms. Rancourt and one for Mr. Smith.

Ms. Rancourt, we always talk about residual biomass. How can biofuels help to reduce rural and remote—particularly indigenous—communities' dependence on diesel?

[Emmanuelle Rancourt]

We are mostly interested in direct heating because, as mentioned earlier, it is the most efficient mode of energy conversion. More transformation means more emissions, more energy used and more money required. As a result, we try to promote direct heating.

That would work really well with northern communities, because heating is a major need of theirs. Also, when it is very cold and Hydro-Québec cannot meet the demand during peak periods, it would help to alleviate the problem.

As for liquid biofuels, I am really not an expert in that area. I know that some people in the room are far more knowledgeable than I am on that subject. We specialize in solid biomass that is burned for direct heating.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you, Ms. Rancourt.

Mr. Smith, what measures could the federal government implement to encourage the development of new forest biomass products?

[The Chair, Liberal, Francis Scarpaleggia]

You have 30 seconds.

[Dr. Donald L. Smith]

There's quite a bit that could be done. There's the potential for the addition of a number of new technologies. In the area where I work, we are currently just beginning to open the doors on this, and there are many potential technologies in there. What we need is some funding to get that tail-end research done, to get it to the point where the materials can be moved to applied research, and ultimately to the market. These sorts of things would help.

In terms of some sort of support, I suppose, for initial start-up companies, we should recognize the importance of this area and get them moving quickly in order to get them stable as quickly as possible.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Ms. Collins, you have two minutes.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

Mr. Thomson, you're recommending establishing a low-carbon fuel production tax credit. Can you expand more on how you'd like to see a tax credit applied?

I have a related question. You're also recommending converting the government's proposed CCUS investment tax credit into a production tax credit. Can you explain a bit more how that would benefit biofuel production?

[Ian Thomson]

I can. A clean fuel production credit would match what is in place in the U.S. It would give provisions for fuels like renewable diesel, sustainable aviation fuel and synthetic fuels made from direct air capture, etc. It would look to align with the provisions in the U.S. The Americans have attached some carbon intensity provisions to their proposed incentives, which is appropriate. If you want to incent lower-carbon fuels, then the rates are higher and that's appropriate.

It would be in the Income Tax Act, so it would not be subject to being a political football, quite frankly. We hear from all of the fuel sectors—conventional and alternative—that stability of policy and signal is arguably the most important thing of all, in addition to the level.

The Americans would propose it for three years. We're proposing one that would go for the better part of a decade to give that long-term benefit.

The costs of these programs, by the way, do tend to go back into the fuel, so Canadians would be getting less expensive fuels as a result of this. We're not doubling up on the cost of fuels.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll go now to Mr. Dreeshen for three and a half minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thanks once again.

Of course, natural gas is an important feedstock in fertilizer production. It's this government's fixation on hydrocarbon reduction that has initiated this narrative of fertilizer use reduction, but there are a lot of other things that can be done in agriculture.

Mr. Saik, some initiatives are taking place, and I believe you've probably seen them. For example, there's exhaust management and putting the CO2 into the ground. I wonder if you could speak to some of these and the significance of these other strategies that you see in the agricultural field.

[Robert Saik]

I think it's important to understand that every breath we take is 78% inert nitrogen—every breath you take, every move you make, it should be a song. The Haber-Bosch process turns that inert nitrogen into fertilizer that ultimately supports 50% of the protein in every man, woman and child on planet earth. It's also a question of how you sustain life on Mars, where it's only 2.6% inert nitrogen.

From a standpoint of what we could do in agriculture, I already talked about some of the things. The ability for us to utilize nitrogen inhibitors to reduce the conversion of fertilizer into urea or into nitrous oxide is important. The ability for us to include methane reduction agents into feeding, when you're feeding cattle.... There are methane reduction agents being researched right now that can reduce the methane or the burps from cattle by 50% to 75%. Seaweed extracts are one of these. Again, if you incent farmers to do these things, they'll find ways to do these things.

I think the most important thing we can do is grow more crop. It takes 3.3 pounds of nitrogen to grow a bushel of canola, and 1.5 pounds of nitrogen to grow a bushel of corn. The more corn you grow, paradoxically, the more root mass you have and the more carbon sequestration you have.

The idea of reducing nitrous oxide emissions from agriculture is laudable, but all the discussion.... If we do this and achieve a 0.0028% reduction in Canada, this is not what we should be going after. We should be going after other things that make our farmers more productive, not looking at policies that are punitive to agriculture production in Canada.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Some of those new technologies are, of course, in precision farming. I'm just wondering if you could, in the short time we have left, quickly describe where that is going.

[Robert Saik]

We're utilizing satellite technology or remote-sensing technology to do bio-vegetation index maps. We take soil samples based on the zones that are in those bio-vegetation index maps. Satellites give us the maps. We go into the field and soil-test, and then agronomists like me will make recommendations based on the amount of fertilizer that we want to hit, based on the yield target. We put these into air seeders, and as the air seeders go across the field with GPS guidance, they regulate the amount of fertilizer to hit the target yield.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you very much.

Ms. Thompson, you have three and a half minutes.