Finance Committee on May 28th, 2020

[Sean Fraser, Liberal, Central Nova, NS]

I'll quickly ask the same question of our guests from Équiterre. Thank you for your advocacy on behalf of our environment.

What is the best thing we can do? You mentioned accountability. Is this a national parliamentary climate emissions officer? Is this some kind of public reporting? Is it community-level discussions from municipalities or taking on climate change coordinators? What does this accountability look like that would give Canadians faith that the big picture is taken care of so that we need not need go to war on every single project? Is there no solution along those lines?

[Caroline Brouillette]

Thank you very much for the question.

I would first like to answer another question that was asked earlier about the carbon intensity of a Canadian barrel of oil. I believe it is important to keep in mind that oil and gas sector emissions have increased since the last update. Even if the carbon intensity of a barrel of oil is reduced, total emissions will nevertheless rise if we increase oil and gas production. It is important to reduce the absolute value.

With respect to climate responsibility—

[Michael McLeod, Liberal, Northwest Territories, NT]

Mr. Chair, there's no interpretation.

[The Chair, Liberal, Wayne Easter]

I'm sorry, Ms. Brouillette. The Internet connection is really unstable.

Please start over and go really slow.

[Caroline Brouillette]

Okay.

I briefly mentioned the importance of taking into account the increase in the absolute value of the oil and gas sector's emissions, not just the carbon intensity of each barrel. The sector's greenhouse gas emissions are rising even though the carbon intensity of each barrel is lower.

With respect to climate accountability, Équiterre believes that Parliament should follow in the footsteps of the United Kingdom and New Zealand and adopt a climate act. The act should include greenhouse gas emissions reduction targets and a process for setting a carbon budget every five years, as well as frequent, binding reports to Parliament. A panel of independent experts must advise the government on its greenhouse gas emissions reduction action plans.

[The Chair, Liberal, Wayne Easter]

You have one more quick question, Sean.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you. It will be quick.

To our guests from the Mining Association of Canada, I know you have been making some noise around the importance of critical minerals, perhaps in a pre-COVID environment in a lot of ways. I assume that, like every other sector, you feel either the supply or demand shock that is going through the entire economy right now.

I'm worried about our inability to manufacture certain kinds of projects that were really demonstrating opportunities for growth. I'm curious if you can highlight for us what challenges there are in the critical minerals sector and whether there is something we need to do during this public health emergency to ensure that the supply chain remains intact for those critical minerals.

[Brendan Marshall]

Just for clarity, so that everybody understands, critical minerals are a broad set of materials, of which Canada generates a large volume. They could be base metals. They also could be rare earths.

I think the question Sean is getting at here has particularly to do with rare earths: What do we need to be able to reshore and create a market for the development of these materials from Canada, through a North American or predominantly western-based supply chain?

The first thing is that there are some technological challenges, so research and development investment would be very helpful, particularly on sorting and manufacturing, but there are also downstream issues. For example, there is actually no current market within North America, more broadly speaking, or within Canada specifically for the manufacturing or consumption of these materials.

Thus, when the federal government is thinking about what measures it could put in place, I would hearken back to the presentation I made to this committee as part of the pre-budget consultation process and the conversation that Mr. Easter and I had after that session.

I would be happy to circulate again to this group a more detailed set of recommendations that MAC has developed, but at the end of the day, we're seeking R and D investments to support Natural Resources Canada, particularly Canmet, in bolstering the technological capacity for sorting and separating these materials. We're also seeking outside-the-box thinking about what the government can do to bring the types of advanced manufacturing back to Canada, back to North America, that rely on a stable supply of these materials that we have but are looking for markets to sell to.

[The Chair, Liberal, Wayne Easter]

We will have to end it there.

We'll turn to Mr. Cumming, and then to Peter Fragiskatos.

James.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you to all the witnesses for appearing today.

To start, I want to focus my questions on Mr. Kiss.

Mr. Kiss, you appeared at the finance committee some time ago and led us through the problems that the oil sector was starting to see with pricing conditions and that type of thing. Now we advance forward, and certainly your firm has been hit incredibly hard, which tears at my heart as an Albertan, but relief was supposed to be here.

Relief was supposed to come by way of these loans, whether the BDC loans, the LEEFF loans, or the variety of packages that have come. Of those larger-scale or mid-size loans, are you aware of anybody in the industry who has applied and been successful with any of those loans or loan guarantees?

[Peter Kiss]

Thank you, Mr. Cumming.

The short answer is no. On the BDC loans, actually the right question is, who is being denied and why? We have applied. We were told that our loan should be funded, but that's all we know. We haven't been funded, and I would imagine that many are in the same boat as me.

As for the LEEFF, as Mr. Goodman, Mr. Waterman and I spoke about, the conditions surrounding the LEEFF loan are untenable for anyone to actually take advantage of that.

[James Cumming, Conservative, Edmonton Centre, AB]

I want to switch gears a bit.

You've been involved in this industry for a long period of time. As you are aware, we have been racking up COVID debt of $250 billion, or it could be $300 billion or $350 billion. Who knows where it will stop? We've heard from other witnesses how important the resource sector will be as part of that recovery. We've heard some of the witnesses today talk about a fair transition. Canada has the third-largest reserves on the planet and massive natural gas supplies. This is really a global issue and a global transition.

Can you speak about how well positioned the Canadian oil and gas business is to be part of the solution and not part of the problem, and how it can generate the revenue that this country is going to desperately need?

[Peter Kiss]

As the second- or third-largest, depending how you measure it, with our resources—not only in the energy sector but with minerals and timber, and agriculture, for that matter—we have a tremendous opportunity. The problem is that we can't get our resources to market.

We're building the Trans Mountain pipeline. Yes, it is economical; otherwise it wouldn't be getting built. We could have had northern gateway; we could have had energy east. We could alleviate the price discounts that Canadian producers are paying.

All of that then turns into more resource royalties for governments, both provincial and federal, more jobs and more taxes. That's how we're going to get out of this. If we should be doing anything right now, we should be stepping on the gas and getting our resources to market. We have a tremendous opportunity.

When we talk about transitioning to a greener economy, I used to think the last person with oil in the ground was the winner, because you'd have energy. Now that's not the case. Now you want to be the first person to get rid of it. We should be stepping on the gas and selling our resources to the world while we still can, and then taking that money and reinvesting it into other areas of the economy and bailing ourselves out from all the money we're spending on COVID.

[James Cumming, Conservative, Edmonton Centre, AB]

When I suggest that it's a global issue, there is still demand for energy, and the price is the price today, but the price will improve at some point in time.

When we look at the producers who are out there, if we want to gain market share and if we're extracting at a higher environmental standard, does it make any sense to you that we wouldn't want to participate in the global market?

[Peter Kiss]

Absolutely. It's incredibly frustrating. Canada has high environmental standards. That's not frustrating. The frustrating part is what it costs to get our oil out of the ground. We have to mine it. We can't just drill a hole and put a pipe on and sell it.

We have the highest environmental standards and....

Sorry, Mr. Cumming, I lost track of your question.

[James Cumming, Conservative, Edmonton Centre, AB]

It was the comparison with other countries that have a lower standard, so that we can gain market share with our high standards.

[Peter Kiss]

Thank you.

We're selling green oil. It's of the highest environmental standards in the world. When you compare it to oil that we're importing from various non-friendly jurisdictions, it's not even comparable. We should be out there marketing our oil as green oil, which it truly is—oil and gas, for that matter.

[The Chair, Liberal, Wayne Easter]

James, you're quite a bit over the time, but I know Mr. Crothers wanted in on your previous question.

Mr. Crothers, go ahead.

[Michael Crothers]

Thank you.

A real-life example of what you're speaking about is the LNG Canada project. Shell is a leading investor in that project. It's 10,000 construction jobs, 400 full-time jobs, and it is half the global average of carbon intensity for LNG, anywhere in the world. It shows how this resource, which is vast in northeastern B.C., can get to market. Customers are now starting to demand lower-carbon LNG cargo.

That is a perfect example of what you're saying.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll turn to Mr. Fragiskatos, and we might go to some single questions from Mr. Brunelle-Duceppe and Mr. Julian.

Go ahead, Peter.

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

Thank you, Mr. Chair.

Thank you to the witnesses.

The rise of renewables has brought into focus again the discussion around peak oil. I wonder what witnesses based in the oil and gas sector have to say on the point about peak oil.

I preface the end of my question by simply saying that I'm very sympathetic to what's going on in western Canada right now, particularly in Alberta.

In the discussions about peak oil, we've seen where they've come and gone. In the early 2000s, the feeling was that by this time, 2020, the world would be out of oil. Clearly, it's not. I wonder what your thoughts are as individuals who work in that sector.

[Tristan Goodman]

Mr. Chairman, may I respond to that first?

[The Chair, Liberal, Wayne Easter]

Go ahead.

[Tristan Goodman]

First, I do appreciate your sympathies. They actually mean a lot, coming from various areas of the country. It is a very difficult time. It's difficult across the country, but it's been difficult prior to COVID-19, so thank you for that.

I would actually turn to the gold standard, which is the International Energy Agency. No question, we are going to see exponential growth within the renewable sector. We're also going to see exponential growth on the natural gas side. If you look at their projections, which are considered to be to the highest academic standard, you will see the continued use of oil on a go-forward basis.

It's not a matter of whether it's going to continue to be developed. I think it's a matter of whether we can improve its development using various technologies—such as carbon capture and storage, and others—decarbonize the development of that, and do it within a Canadian context.

Thank you.

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

Thank you very much.

Mr. Crothers.