Thank you, Mr. Chairman.
Good afternoon, distinguished committee members.
On behalf of Enbridge and its 4,600 employees, I'm pleased to share with you our perspectives on Canada's place in a competitive world. The focus of my remarks will be on the key role played by clean energy technologies.
Energy is a vital component of the Canadian economy, not only as a large export-oriented industry in its own right but also in powering the balance of the economy. Enbridge operates Canada's largest natural gas distribution utility and the world's longest crude oil and liquid pipeline system. A safe and reliable energy transportation system is one of the foundations of the attractive investment climate that Canada currently enjoys.
One of the challenges facing Canada is to introduce clean energy technologies into the energy supply mix in the face of significant barriers. Market forces alone will not capture the environmental benefits in the short to medium term. This is due to the cost of replacing existing assets before their useful lives are over and the cost advantages held by incumbent technologies with up to a hundred years of development behind them. I believe that selected government policy measures are needed to speed up market entry of clean energy technologies and capture their environmental benefits.
Last week, the Prime Minister announced that his government is launching the country's first comprehensive approach to tackling air pollution and greenhouse gas emissions, including introducing Canada's clean air act in the House of Commons. I congratulate the government on this initiative and look forward to participating in the promised consultations to develop regulatory frameworks. Urban air quality is a serious national health issue, and a coordinated approach with three levels of government as well as the United States will be necessary.
Enbridge is committed to sustainable development policies, and it is actively investing in clean energy technologies, such as wind power and low-impact power generation through natural-gas-fuelled stationary fuel cells. However, I would caution parliamentarians to be realistic about the barriers to commercializing clean energy technologies.
The National Energy Board forecasts that renewable energy sources will only be 10% of Canada's energy mix by the year 2025. Many renewable energy technologies are only marginal in terms of economic viability, making it difficult for the private sector to justify investing without some form of fiscal stimulation by the government.
The wind power production incentive was a well-designed and well-understood fiscal measure that was successful in stimulating investment in wind power. Enbridge, together with our joint venture partners, has investment commitments for 271 megawatts of wind power. I believe the government should restore the wind power production incentive program to maintain a positive investment climate for wind power. A tax-driven alternative approach could be designed to provide the same economic incentive.
Canada's energy mix needs to be based upon a portfolio of energy sources. Low-impact technologies, such as stationary fuel cells, which provide power from electrochemical conversion of fuel rather than combustion, can make an important contribution. Unfortunately, fuel cells are not currently accorded the same status as traditional renewables. We recommend that the government extend the same fiscal treatment to low-impact technologies, such as stationary fuel cells, as it provides to traditional renewable energy technologies, such as wind and solar. Power generated from stationary fuel cells can make a significant near-term contribution to cleaner air in urban areas.
In his announcement last week about the clean air act, the Prime Minister stated that reliance upon regulatory measures would be the policy lever for the clean air act. I agree that a supportive regulatory framework can effect change in investment in clean technologies in the long run and that it is likely one of the most cost-effective approaches. It will be important, however, for the government to be realistic about the long-term reliance on regulatory policy measures to affect investment in clean energy technologies. A phase-in period will probably be required for the new regulations to recognize the stranded assets problems that will be created. Investors will also be faced with a cost premium often associated with new clean energy technologies.
To capture environmental benefits in the short to medium term for clean energy technologies, fiscal measures, such as the wind power production incentive, for both renewable and low-impact technologies, will be needed as complementary measures to the longer-term regulatory measures.
Thank you for the opportunity to present the views of Enbridge to your committee.