Environment Committee on Oct. 9th, 2025

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to both presenters for your presentations. They were very enlightening.

Mr. DeMarco, I want to repeat a question that was asked by my colleague. It was quite intriguing, because most of us are quite new to this committee and to the environment file at the federal level.

Thanks to your work, Canadians learned the truth about the Liberal government's $8-billion net-zero accelerator fund, which is taxpayer money flowing to major corporations with no binding requirement to cut emissions and no proof of value for money. Would you consider conducting an updated audit of that program?

[Jerry V. DeMarco]

Thank you for the question.

Our net-zero accelerator initiative report from last year was the subject of some hearings at this committee and at other committees as well. I should add, before directly addressing your question, that we do point out, as the other witness, Mr. Cosbey, does here today, the absence of an industrial strategy that would help guide the choice of sectors to subsidize at the federal level. That's something that comes up in that report as well.

In terms of a follow-up, we now have a system within our office through which we have committed to report to Parliament annually on the climate change file. We've done two and we'll do another one in November. We will select reports from previous years to do follow-ups on that cycle. We may not do a stand-alone follow-up of the net-zero accelerator, but it is now in the hopper for our continuous reporting on an annual basis. I can answer in the positive that, yes, we will be looking at it again, but maybe not as a stand-alone report.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Great. Thank you very much.

Mr. Cosbey, on competitiveness, I read the job description of your department. When you're doing your work, do you actually compare different programs, from different countries, that deal with emissions, specifically with oil, gas, gasoline, diesel and natural gas?

[Aaron Cosbey]

I'm sorry. Can you repeat the question? Do we compare different programs from different countries with respect to their oil and gas sectors? Was that the question?

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Yes, because to my way of thinking, I'm thinking of competitiveness in terms of a global scheme, and our competitors in terms of oil and gas are Russia, Saudi Arabia and the United States, for example. Eighty per cent of our product comes from the United States.

Do you do any kind of analysis to compare the competitiveness of their sectors with what we're doing here in Canada?

[Aaron Cosbey]

We did a fairly robust analysis of the competitiveness determinants of Canadian oil and gas as part of our overall sectoral netcasting.

I should say in terms of oil and gas that the competitiveness of Canadian oil and gas, especially in the U.S. market, is not under threat. It's delivered by fixed assets. Those are pipelines. It goes primarily to Midwestern refiners that have to buy our particular brand of sour heavy crude because they're tooled up with billions of dollars of investment to be able to use that. They can't just switch to Permian basin light supplies. That doesn't work. We pretty much have a captive market there.

As well, our tidewater supply of oil does pretty well. We stack up well in terms of heavy crude against our competitors in Venezuela and Mexico. Again, there are facilities globally that only want that kind of heavy crude. We're well placed. Our assessment—

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Okay—

[Aaron Cosbey]

—was that we don't have competitiveness problems relative to our international competitors.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Okay. Maybe I didn't phrase that well enough.

We were talking about the emissions cap and the industrial carbon tax, for example. How does that make us competitive with countries that don't have a carbon tax or an emissions cap, such as Russia, Saudi Arabia and United States?

In terms of a global competition scheme, how do we match up on a global level?

[Aaron Cosbey]

I'm sorry. I didn't catch the drift the first time around, but I do come back to the same question. If we're thinking about the competitiveness impacts of climate policy on our Canadian oil and gas exports and we're looking at, for example, our oil exports, we have captive markets. We have, moreover, a great deal of rent accruing to.... There's a fair bit of profit accruing to Canadian producers. We are low-cost producers, and even at $65 U.S. a barrel, we're making a good deal on profit.

Our assessment was that the future costs of climate action in Canada weren't a particularly great concern for the oil sector in particular because of those captive markets. Gas is a little different.

[The Chair, Liberal, Angelo Iacono]

Mr. Fanjoy, the floor is yours for five minutes.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you.

Mr. Cosbey, it's clear that addressing and meeting our targets for addressing climate change is the more affordable route than is not meeting them. Ultimately, we're going to have to get there sometime, and the sooner we get there, the faster we will benefit from greater competitiveness for our industries and greater affordability for Canadians.

Industry and governments are sometimes subject to short-term thinking. This is a long-term problem. I'd be interested in your observations as to how we can encourage industry for its benefit and Canadians for their benefit to look at this as something that may involve some upfront investment but an investment that is going to pay off in spades very quickly.

[Aaron Cosbey]

I wish we had a couple of hours to devote to this, but I'll try to be brief.

Let me dwell on the example of the steel sector in Canada as a concrete example. In that sector, they need to make major investments to decarbonize, and the carbon price is one incentive to make those investments, but there are elements beyond their control that keep them from making those investments. They need to know with some certainty that there's going to be availability of green hydrogen at scale and of low-cost electricity at scale. Otherwise, the carbon price for them is just a cost if they don't have those sorts of guarantees.

They also need de-risking of their initial investments on some technologies that aren't yet proven. There's a huge role for government here in supporting policies to try to get those industries on board. It's not just short-term thinking on their part. There are real obstacles that Canadian policy can help to overcome, to help them decarbonize and ensure their future competitiveness in markets that are going to increasingly care about decarbonized goods flowing from Canada.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you.

Mr. DeMarco, you have a unique perspective here, in that you're doing this work on a federal level. You've previously done it at a provincial level in Ontario. I'd like to hear your observations on how Canada—and I use the term “Canada” to refer to all three levels of government—can run this three-legged race more effectively as we meet our obligations to reduce GHGs.

[Jerry V. DeMarco]

Thank you for the question.

The larger context questions like you're posing right now are important ones, because we can sometimes look at the details of particular programs and then forget that there are underlying challenges present that are very difficult to crack. This is my second hearing this morning where we've been talking about the need for a long-term approach to these issues.

I would say that it's critical—and I don't think Mr. Cosbey used this term—to have social licence for the activities that are going to change people's lives, their livelihoods and their incomes. There needs to be buy-in and that's why education is important. It's actually one of the lessons in our lessons learned report.

If there isn't support for measures, not just among government actors negotiating but amongst the population, the measures will not last. We had the discussion already about the consumer carbon price coming in and then going. I would say that the federal government needs to take the lead and try to encourage a collaborative approach, but should do so in a way that doesn't give the impression that it will do nothing in the absence of consensus. There needs to be some sort of backstop or baseline so that those who are negotiating with the federal government know that there are consequences if we don't reach an agreement.

In negotiation talk, what's our best alternative to a negotiated agreement? In this case, the federal government may come in and do things that the province doesn't want to happen. This is part of the challenge of Canada in a federal state—in addition to the municipal and indigenous governments as well—but it's not something that's impossible to overcome.

[The Chair, Liberal, Angelo Iacono]

Thank you, Mr. DeMarco.

This puts an end to the first round. I would like to thank all witnesses for their testimony this morning.

The witnesses are excused, and the meeting will suspend while we prepare the next witness panel. Thank you.

[The Chair, Liberal, Angelo Iacono]

We'll resume the meeting.

This afternoon, the committee is meeting with the following witnesses by video conference.

From the Canadian Energy Regulator we have Mr. Jonathan Timlin, vice-president, system operations; Mr. Darren Christie, chief economist; and Mr. Sean Maher, professional leader, environment. From the Department of Natural Resources we have Jeff Labonté, associate deputy minister. From the Major Projects Office we have Dawn Farrell, chief executive officer; and Sarah Jackson, director.

Welcome.

Each witness will have five minutes for their opening remarks.

We will start with Mr. Jonathan Timlin.

You have up to five minutes. When you see this sign up, it means you have one minute to go. The other means end of discussion.

[Darren Christie, Chief Economist, Canadian Energy Regulator]

Good morning, Mr. Chair. We're having a technical issue where John Timlin is showing as an attendee rather than a speaker. He's run up to my office. I will hand him my headset. The name tag will be incorrect, I suspect, but I will hand it over to him now if that works.

[The Chair, Liberal, Angelo Iacono]

If you want, I can give you some time to settle that, and we can start with Ms. Farrell.

[Dawn Farrell, Chief Executive Officer, Major Projects Office]

Yes, I can start, if you'd like.

[The Chair, Liberal, Angelo Iacono]

Thank you.

[Dawn Farrell]

Thank you.

I'm Dawn Farrell. I'm the new chief executive officer of the Major Projects Office. I'm joined by my colleagues Mr. Labonté and Sarah Jackson, who were really instrumental in getting this office off the ground, which I started on September 1. In terms of the last 39 days, I can tell you that we are hitting the ground running. There's a lot to do. We have people focused and a plan. There's really a lot under way that hopefully we can convey to you today.

Our job is to advance large-scale projects of national significance that would create major opportunities for our country. We are here to both strengthen the regulatory framework and ensure the financing framework for these projects is such that we can uphold the values of Canadians and bring these projects into execution in a two-year time frame.

We can only do our work if we work in close partnership with federal government departments, provinces, territories and indigenous peoples. One of our main objectives is to ensure that we create enough certainty that we really leverage the power of private investors. What you'll see here today is that we're talking about a major program with billions of dollars. There will be a lot of capital required.

Before I get into the projects and the work of our office, here is some background. We provide a single point of contact and leadership on major projects. I've talked about the partnership that we need to be able to do for that. Our office is focused on identifying and shepherding projects that are of national importance and significance, which means not all projects will be managed through us. There are a lot of projects trying to be managed through us, so we're trying to make that very clear. That being said, as we do our work, we do believe that many projects will benefit from the regulatory streamlining and the financial coordination that we'll provide.

In considering whether a project is of national importance, the office evaluates a variety of factors. They're in the legislation. It's the potential to contribute to Canada's autonomy, resilience and security; the economic benefits; the contribution to indigenous interests; and contributions to clean growth and our climate objectives. It's also about the executability of these projects in a time frame that will make Canada strong over the short term and the long term.

When a project is referred to our office we start the process immediately and begin to think about the work that needs to be done to fast-track its development within the values that we all have. The office's aim in the current projects we're working on is that we're trying to close final regulatory and permitting gaps. We're helping to structure the financing plans and really provide certainty so that proponents can go forward, make FIDs, final investment decisions, and finance their projects.

Not all projects that are referred to our office will be designated under the Building Canada Act. It's just a tool that our office can recommend if we believe that a particular project would benefit from that legislation. We will seek out the best course of action to advance a given project so that proponents can make smart investment decisions.

Five projects have been referred so far. They have ambitious milestones and we are already working on them. Project announcements will follow soon.

We've also started working on several transformative strategies that we were asked to do by the Prime Minister. With those particular transformative strategies we're making project charters, getting teams together and making sure that we can come back with advice around what the strategy is so that we can promote the kinds of projects that we need to build Canada's future.

If you think about transformative projects, there are critical minerals. They are really about our ability to meet our global demand for clean energy production and storage. We're looking at nuclear. We're looking at west wind energy, which is actually wind in the east. We're looking at pathways plus, which is really about how we continue to build our energy infrastructure in a lower carbon way. We're of course looking at the Alto high-speed rail and how we can reduce CO2 with different modes of transportation.

All of these transformative strategies are very powerful for Canada. They will build our competitiveness and make us one of the cleanest economies in the world.

We will be transparent as we go through our processes.

There's a lot to talk about. I look forward to the questions that you have for me today.

[The Chair, Liberal, Angelo Iacono]

Thank you, Ms. Farrell.

Now I'll pass the floor to Mr. Timlin for five minutes.

[Jonathan Timlin, Vice President, System Operations, Canadian Energy Regulator]

Good morning. Can you hear me?

[The Chair, Liberal, Angelo Iacono]

Yes, we hear you. Go ahead, sir.