Thank you, Mr. Chairman and members of the committee. It's a pleasure to speak to you from Calgary.
I received about four hours' notice for this, so you have no handout from me at all. I'm going to speak totally off the cuff. If you want further information provided later, I can do that.
EnergyINet is a completely neutral body. It is neither a lobby group for the industry nor a representative of environmental interests. It is purely a neutral gathering place and network to provide information on energy technologies.
My own background is not as a tax expert or an economist but as somebody who's worked in the areas of energy R and D, innovation, and venture capital. I've been an entrepreneur and a senior government official. My remarks are made in this context.
First of all, Canada need the liquids that are produced and will be produced by increasing activities in the oil sands. We have no other choice if we are to preserve our role as a net energy exporter, with the enormous economic benefits that go along with that.
In spite of the best will in the world on renewable resources--and I applaud initiatives to accelerate the deployment and introduction of alternative and renewable energy resources--many experts will tell you that there is no doubt that we will be using fossil fuels in the amount of 80% to 90% for our energy supplies for the next 50 to 100 years. No tax measures will alter that reality. It is based solely on the amount of energy that this world consumes. Any energy economy measures, any conservation measures, will not close that gap.
So we need the oil that will come from oil sands projects. There are no other practical sources for this. In fact, conventional oil is declining at an increasing rate. Gas has probably plateaued and will decline also.
Not producing oil would give rise to huge negative economic consequences, potential geopolitical tensions, and so on and so forth. We're asked, just as an example, why we can't turn to wind power, and I'd like to give you some numbers on that. A million barrels a day of oil is equivalent to 75% of the total Canadian electricity-generating capacity installed today. It would require 20,000 wind turbines, which is one and one-quarter times the world's installed capacity, and five years of the total wind-turbine production of every manufacturer in the world simply to replace that million barrels a day, dedicated just to Canada. It won't happen.
And anyway, wind turbines produce electricity. Airplanes don't fly very well on electricity. They need liquid fuels. We must have a source of liquid fuels.
The problem, then, which I think can be rationalized with the environmental concerns, is the need to integrate energy and the economy and environmental matters. This comes down simply to a question of providing the right incentives and risk-sharing by government to make certain that innovations that will reduce greenhouse gasses, reduce water usage, and reduce conventional fuel usage are brought into effect.
Canada has had for a long time a very high R and D tax writeoff. This has been ineffective in spurring business research and development. We have one of the highest rates of R and D tax credits. At the same time, we have one of the lowest OECD rates of corporate R and D. Why? Because tax writeoffs for R and D encourage R and D, perhaps, but they do not encourage the implementation and commercialization of such technologies.
It has been repeatedly shown that capital cost allowance and other capital deployment incentives encourage the deployment and commercialization of technologies and innovations. Therefore, my strong recommendation is that this committee look very seriously at encouraging innovations--innovations that would mitigate the impacts of greenhouse gases, that would mitigate the use of excessive amounts of water, that would mitigate other negative environmental effects of increased oil sands production--by providing strong capital incentives for the deployment of technologies that provide those mitigations. Those technologies are today either there or close. We see many oil sands project technologies that in fact have focused on such things as gasification, the possible use of nuclear fuels as a source of energy in the oil sands, alternative sources for hydrogen, and so on and so forth. I'll leave the experts to figure out what the level of risk is and what's tolerable and what's not.
I think the capital tax structure can be used very effectively to encourage oil sands production, which is needed if we are not to fall into a total energy-deficit picture, and at the same time, it can be used to help mitigate the environmental negative impacts.
Thank you.