Finance Committee on May 28th, 2020

[Michael Crothers]

We look at this from the point of view of scenarios: Looking forward over decades, how will the world's energy system transition? It's pretty hard to pick a year at which you will get peak oil, but there definitely will be a time in the next maybe 10 or 20 years when we'll see peak oil.

In the interim, though, recognizing that the demand for oil will still be sustained because it will be a long tail of reduced demand over a long time, how can we meet our commitments for the 1.5°C limit to global warming that we need to, as a society, work towards? That's where the concept of really focusing on reducing emissions now, while we transition to new energy sources, is something that I think we can work in tandem.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Mr. Crothers, you just said something there that sparked my interest.

How do we best prepare for that transition, in your view? Can there be a balance between renewables and oil?

I know that, in your presentation and in other places, you have touched on this. Your answer just now touched on this. As we think about transitioning at some point—whenever that happens in the future—what is the best way forward to achieve a result that is just and that is to the benefit of as many people as possible?

[Michael Crothers]

That is an excellent question.

I think it comes down to taking a holistic approach and understanding that we can transition in a measured way. We don't have to stop the oil and gas sector immediately. However, at the same time, we have to recognize that we do need to make real, consistent improvement, year on year, as we transition to new energies.

Those new energies need a lot of investment because they are very immature. They don't have the affordability for Canadians at this point. If we invest in those while we allow the revenues to come, as we talked about today, from the prosperity of resources that we are blessed with in Canada, we can actually manage that transition in a very intelligent and smooth way over the course of the next 10 to 20 years.

[The Chair, Liberal, Wayne Easter]

I have a question, Peter.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I saw Mr. Waterman's hand go up.

Sir, please, I would love to hear from you.

[Adam S. Waterman]

Thank you.

I think one thing that's lost in the political dichotomy of this issue, green versus oil, is that oil is treated as a monolithic product. That's not the case. Any scenario of an energy transition is going to have a balance of a facility able to carry a base load to complement solar and wind or any measure of renewable. Our LNG product streams are fantastic for that. They're among the greenest in the world. That's a scenario for that.

With regard to the oil side, it behooves anybody generating policy on this issue to see the products that our barrels generate. We don't generate a lot of gasoline. Any loss in ground transportation is not going to be a huge issue. We're great at generating jet fuel, diesel and paving. In any scenario where Tesla owns 90% of the market share of passenger cars, we're still needed.

Even in an energy transition, our barrels are still going to be needed by the global market, as well as our LNG.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you. That's very much appreciated.

Mr. Chair, I did see Mr. Egan's hand go up.

[The Chair, Liberal, Wayne Easter]

I didn't.

[Peter Fragiskatos, Liberal, London North Centre, ON]

It's up to you, Mr. Chair. You're running the meeting.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Egan, if you want to add something.

[Timothy Egan]

Thank you.

I just want to remind committee members of a couple of things. The first conversation about peak oil suggested we were running out of these products, oil and gas. The fact is that the extraordinary technological innovation in the sector demonstrated an ability to recover enormous new supplies. We have extraordinary supplies of both oil and gas in Canada, hundreds of years of supply of both. That's a phenomenal resource advantage.

When we talk about transition, I get very troubled, because the suggestion is that we're transitioning from these incredible resource supplies to something else, instead of saying, “How can we use these incredible resources better?” There are lots of ways for us to use them better. In fact, doing so depends on the engagement of the sector, not shutting it down. Therefore, the language of transition is problematic.

Mr. Fragiskatos, when you talk about renewables as though there's some move from one product to another in renewables, this is simply not true. First, every renewable is utterly dependent on the oil and gas sector in terms of the production of energy from them. Second, renewables are utterly dependent on hydrocarbons in order to be a reliable source of energy, so they can't operate independent of it. Third—

[Peter Fragiskatos, Liberal, London North Centre, ON]

Sir, it's not just me who is talking about the transition. Individuals in your own sector and on this panel from the oil sector are talking about a transition.

[Timothy Egan]

I'm sorry. I missed that.

[The Chair, Liberal, Wayne Easter]

Mr. Egan, just finish your point and we will move along. Go ahead.

[Timothy Egan]

I was going to make the point that, third, in fact oil and gas companies are driving a renewables conversation of their own through products such as renewable gas and the use of hydrogen and other things. Very often, the conversation excludes those opportunities that are, in many instances, the more affordable renewable options.

I just wanted to make a few points of clarification about how the language is used and what it means for the oil and gas sector.

[The Chair, Liberal, Wayne Easter]

With that, we'll have to move along. Before I go to Alexis, I do have a couple of questions of clarification.

Mr. Goodman, earlier you said the key is going to be investment capital, so I just wonder, where do we go as we come out of this pandemic?

Mr. Kiss, earlier you made the point about who is being denied and why. I wasn't sure whether that was on the wage subsidy or something else. Could you clarify that?

Lastly, Mr. Kiss, you said on the LEEFF program that it's not accessible to those who need it. Can it be fixed, and if so, how?

I'll start with Mr. Goodman, and then I'll turn to Mr. Kiss.

Mr. Goodman, on the investment capital, what can be done there? How do we get it?

[Tristan Goodman]

First, the investment capital will depend on continuing with the existing policies on indigenous reconciliation and GHG emissions. There's a commitment around that. I think it helps investors feel comfortable.

We will need strong performance on ESG to showcase. Instead of waving our arms around about how good we are, we need to actually demonstrate that to independent sources.

Finally, with those pieces in place, we will need positive, constructive feedback from the highest levels of this government to indicate that this country does want that investment capital within those areas.

As Mr. Crothers raised with LNG Canada, this has been successful, tremendously positive from all perspectives. Whether you look at it economically, in terms of indigenous reconciliation, or from the perspective of GHGs, there's a lot more we can do around those. We also need to get the pipelines that have been approved through and constructed.

[The Chair, Liberal, Wayne Easter]

Mr. Kiss, could you clarify?

[Peter Kiss]

Certainly. Thank you, Mr. Chair.

When I said the real question to ask is who is not qualifying, that was around the companies applying for the BDC, EDC and LEEFF loans. It would behoove the government to find out why people aren't successful, and then the system could be tweaked accordingly.

Then, can the LEEFF program be fixed? I'm sure it can. The way it is set up right now, it's too difficult for the large employers to qualify, and if they do qualify, there's convertible debt; the convertible debt turns into shares, and as Mr. Waterman also talked about, you end up with the government on your board. Making it easier and more accessible to companies that need it is the key.

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. Brunelle-Duceppe, you have a single question, and Mr. Julian has a single question.

Alexis.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you, Mr. Chair.

I will keep this brief. My question is for the Équiterre representatives.

I would like to know what they think of Kristina Michaud's Bill C-215, An Act respecting Canada’s fulfillment of its greenhouse gas emissions reduction obligations, which is about Canada's commitment to the Paris agreements.

[Caroline Brouillette]

Thank you so much for that question.

As I said earlier, Équiterre is in favour of legislation that enshrines Canada's Paris agreement targets in law. We are looking at ways to make the 2030 targets more ambitious and to achieve net zero emissions by 2050.

We may add some details about implementing the targets to ensure continuous monitoring.

[The Chair, Liberal, Wayne Easter]

Thank you.

Peter Julian is next, and I know Michael McLeod always has a question on mining in the north, so we'll end with Mr. McLeod.

Peter.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair.

I also want to thank all the witnesses for joining us.

As I said earlier, I used to work at the Shellburn oil refinery in Burnaby. Finding ways for workers to transition to the green energy sector really matters to me. Investment is crucial to ensuring that these jobs are considered a priority during the transition period.

My questions are for the Équiterre representatives.

You said that, when this crisis ends, it will be extremely important to invest in public transit. We've already heard that our public transit network is in real danger because the federal government has failed to take action.

That goes for health care too, especially Quebec's residential and long-term care centres and Ontario's seniors' homes. Clearly, it is critically important to create a public network with adequate funding.

Don't you think these two elements should be considered priorities once the pandemic is over?

[Marc-André Viau]

Thank you for your question, Mr. Julian.

I certainly agree with you. I wouldn't contradict what you just said.

Investment is crucial to a strong public network for health care and other services. This pandemic has made it clear that Canadians need a strong public health network. That is an important lesson to keep in mind when we move forward with rebuilding.

Electrifying public transit is also another big issue. That brings me to the energy issue, which was the subject of a major discussion I wish I could have been a part of. The issue of affordable energy was raised. Yes, energy has to be affordable, but it also has to be clean so that the damage done by combustion and fossil fuel development doesn't keep contributing to public health and environmental crises.

Lastly, if I may, Mr. Kiss said just now that Canada is turning into Europe. Let me just say that here in Quebec, in Montreal, we already have some of that European flair. We sure don't mind being compared to European countries.

We also agree that workers affected by COVID-19 should have 10 sick days.

Mr. Julian, I want to thank you and your party. Your negotiations with the Liberal Party resulted in people getting those 10 additional days.