Evidence of meeting #36 for Foreign Affairs and International Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was energy.
A recording is available from Parliament.
3:55 p.m.
Liberal
Rachel Bendayan Liberal Outremont, QC
Is it possible to do this immediately, to answer the call from our European allies?
3:55 p.m.
President and Chief Executive Officer, Canadian Gas Association
As I said in my remarks, I think that in the near term there's very little we can do. From speaking with our European allies, I know there's an immediate need for the 2023 winter. Then there's the 2024 winter. Then there are the several winters after that. They're very concerned about that. In conversations I've had with the Europeans, they've said they'd love it if we could do a lot for next winter, but they're thinking about fundamentally changing a long-term relationship and they want Canada to be part of the future.
3:55 p.m.
Liberal
3:55 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Thank you, Ms. Bendayan.
We now go to Mr. Bergeron. You have six minutes, sir.
November 14th, 2022 / 3:55 p.m.
Bloc
Stéphane Bergeron Bloc Montarville, QC
Thank you, Mr. Chair.
Mr. Egan, thank you for being with us this afternoon.
As I listen to you speak, I can't help but bring up UN secretary-general Antonio Guterres, who in August called the record profits by the oil and gas industry immoral in the middle of a global energy crisis. Earlier this year, in April, he had already said that investing in new fossil fuel infrastructure was moral and economic folly.
We learned recently that among the G20 countries, Canada is the second highest public funder of fossil fuel projects. Each year from 2019 to 2021, Canada invested up to US$8.5 billion in fossil fuel projects.
Given the current situation and considering the comments by the secretary-general of the United Nations, who describes the race to develop fossil fuels as madness and immoral, how do we reconcile what you're saying here this afternoon with these warnings from the UN secretary-general?
4 p.m.
President and Chief Executive Officer, Canadian Gas Association
I've just come back from International Gas Union meetings in Peru. I represent Canada in the global association for the industry. At those meetings, there were representatives from several South American countries, including Colombia, Chile, Peru and others. Overwhelmingly, the comment they made about natural gas development was that the single most effective way to reduce poverty in the developing world is to develop fossil fuel resources, like natural gas, to make affordable energy available to those who don't have it. That dramatically improves the lives of millions around the world, and it has dramatically improved the lives of millions in places like our country and Europe.
At that meeting, there was a representative from the Canadian first nations community who spoke about the opportunity that natural gas development represents to addressing economic reconciliation in Canada.
To your specific point about the profits of companies, companies are making profits as commodities rise in price. That's always the case. That's what happens in markets. I would also note that every government in this country benefits from those hard commodity prices in the generation of extraordinary tax revenues that underwrite a host of public services.
On balance, I think the economic opportunity offered by the existence of those companies and their success is great for all involved.
4 p.m.
Bloc
Stéphane Bergeron Bloc Montarville, QC
I believe that we should understand the UN secretary-general's comments to mean: Profits are great, work is great; but in practice, if that eventually leads to the end of life itself, is it really worth it? I feel that's why he was talking about madness and immorality.
You're talking about people who have jobs because of the fossil fuel industry. I'll give you that. However, these days, when it seems like fossil fuels are on the way out, you have to recognize that the companies in this industry are making huge profits. At Imperial Oil Limited, we're talking about a net profit of about $1 billion in the first quarter of the year, almost triple the profits reported in the same period last year and one of its highest quarterly profits figure in 30 years.
Again, how can we reconcile this race to rake in profits by the fossil fuel companies with what the UN secretary-general said in August, that this race to make record profits in the middle of an energy crisis is just plain immoral?
4 p.m.
President and Chief Executive Officer, Canadian Gas Association
Again, the profit of any company and any sector delivers benefits across society. If you take issue with the idea of profitable economic sectors, I think there may be more fundamental issues with the functioning of an open market system, because that's what a market system does. It delivers and distributes enormous benefits across the board. You can find exceptions where those profits are particularly high at a particular time. Again, invariably, the return in the tax-based revenue—the royalties and so on—is extraordinary.
On the point about the morality of the question, I would point to the fact that over the course of the 20th century, the human condition has improved dramatically, and the numbers of deaths and tragic incidents as a consequence of natural disasters and other disasters have dropped dramatically. The quality of human life has increased dramatically. I think that's a direct consequence of our ability to deliver affordable energy to people around the world.
In doing so, I would say to the Secretary General—as I know his staff do—that there are enormous benefits that come from this sector. They are benefits that have enabled us to do many of the things that the United Nations is doing around the world.
4 p.m.
Bloc
Stéphane Bergeron Bloc Montarville, QC
Mr. Egan, a few days ago this committee looked into the record flooding in Pakistan these past few months, which is a direct result of climate change.
You know that these changes are being caused by rising greenhouse gas emissions. In Canada, we know that many of those emissions are a direct result of developing and burning fossil fuels.
We're in the midst of an unprecedented energy crisis and inflation is running rampant around the world. Does it seem right to you that companies in the fossil fuel sector are making record profits? I find it somewhat improper in the current context.
4:05 p.m.
Liberal
4:05 p.m.
President and Chief Executive Officer, Canadian Gas Association
Well, sure. What I would say is that we can point to any global crisis and we can identify the horrors that it represents for the human condition. We can say, “What do we do to address those horrors?” Those societies that are best able to address those horrors are those societies that have the infrastructure and the means to reduce the kind of human suffering you're referencing. The societies that can do that are the societies that have built that robust infrastructure. When we do that, we can make a dramatic improvement in the human condition.
4:05 p.m.
Liberal
4:05 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
Thank you, Mr. Chair.
Thank you very much for your testimony and for answering our questions and providing your perceptions on these things.
There's just one thing I want to clarify. When we talk about benefiting people in the global south, I think we all have to acknowledge that historically speaking, resource extraction has not benefited people in the global south. It has, in fact, been the opposite case.
That's not really what I want to ask a question on. I want to ask you a bit of a question on some of your experiences with the Chancellor and with our supplying of energy to Germany, because of course, on February 24, the world changed. None of us were ready for what ensued. Certainly the weaponization of energy by Vladimir Putin and his illegal war on Ukraine have had deep impacts around the world.
You said that Chancellor Scholz had said, “We need your gas.” I was in Germany last week. I actually met with the Chancellor. I met with Wolfgang Schmidt, who is, of course, the head of the Chancellery. They made it very clear that they do want access to natural gas right now to help them, but not in 2023, because they were quite clear that in 2023 they will be fine. They do want to have access to natural gas going forward, but they want it for the short term, because they have a very strong vision for dealing with the climate crisis.
As they are building their transition hubs, as they are building things within Hamburg to deal with natural gas, they are ensuring that all of those pieces are equipped, or will be able to be equipped, for hydrogen, because they are not prepared to go into 10-, 12-, 15- or 20-year contracts on natural gas. They are interested in short-term natural gas and then will do a very quick pivot and move as soon as possible to renewables.
That was made very clear to us, so when we talk about the idea that right now we don't have the capacity to give natural gas to Germany.... We don't have that infrastructure. I may agree with you 100% that the infrastructure could have been useful, that it would have been nice to have, but we don't have it.
Realistically, are you describing a “we want your natural gas for the long term” strategy when the long term doesn't appear to be what the world is looking for in terms of natural gas?
4:05 p.m.
President and Chief Executive Officer, Canadian Gas Association
The comment about the German targets is a very good one.
If I recall correctly—correct me if I'm wrong—I think the Germans said they would like to be no longer using gas by 2040. I think that's their target year.
4:05 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
And they will be reducing it more and more every year.
4:05 p.m.
President and Chief Executive Officer, Canadian Gas Association
Right. The year 2040 is 18 years away. When we talk about long-term contracts in natural gas, we are usually talking about 25 years in longer-term contracts, but, to your point, the Germans are saying, “We don't want a 25-year contract.”
As some German colleagues have said to me, there's also a concept of the—I apologize for my German pronunciation—Ringstrasse, the idea of a ring road. The point is to move gas into the market, and maybe for the next 18 years the Germans will use that gas, and maybe to your point, the Germans will use a declining amount of that gas over the next 18 years.
If you look at any forecasts—including UN forecasts, including IEA forecasts—you see that the world is going to be using gas well into this century, well beyond that target that the Germans have set for themselves. Many other countries will still be using gas, and Canada should be, as many have said, the last molecule. Our gas could be meeting that global need. Moreover, our gas is already performing better than much of the supply that's out there, so it could make a significant environmental contribution now.
The other point I'd make about hydrogen is that you can make hydrogen from a variety of sources, and, as this government has noted, the colour shouldn't matter at this point. What we should be about is making hydrogen. If we're making hydrogen in probably the most likely way around much of the world, it will be made from natural gas, so why wouldn't Canadian natural gas be the source for the German hydrogen? Why wouldn't Canadian natural gas be the source for hydrogen in many other markets of the world?
My point is, again, why wouldn't we, as we have done with a host of our resources over the course of our history, see that we produce those resources in an extraordinarily efficient way, in an environmentally preferable way, in an affordable way? Why wouldn't we try to get those to the global market to help the world?
4:10 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
One would also be able to argue it this way: Why wouldn't we want to be pushing for advancement in technologies that take more and more liquid natural gas off the market as we develop a greener way of providing energy to people around the world? There's also that, of course.
While I will say that I think we need to be open to all colours—the turquoise, the grey, the blue, the green, whatever colour that is—we can very clearly say that green hydrogen is the preferred hydrogen for Germany, and for all of us, because it is better for our climate change targets and our goals.
There is another thing I wanted to ask you about. I'm not an energy expert. I'm from Alberta, so maybe I should be, but I'm not an energy expert.
When we talk about infrastructure and regulatory frameworks, we are talking about building a pipeline to go across the country. That's what that means. When you say that we are going to expedite that, or it should be expedited, is what you're saying that we should not listen to provinces and indigenous groups in the development of that pipeline?
What expedites the regulatory framework? What's stopping the regulatory framework?
4:10 p.m.
President and Chief Executive Officer, Canadian Gas Association
Of course, I wouldn't say we shouldn't listen to provinces and first nations. In my experience of late, certainly with respect to first nations, they've been some of the biggest advocates of resource development—
4:10 p.m.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
We always have to be very clear to note that there is not one opinion within any group.
4:10 p.m.
President and Chief Executive Officer, Canadian Gas Association
That is correct. There are hundreds of first nations across this country. Each has a unique view on these issues.
In my experience over the last year, I've been struck by how many first nations are stepping forward and saying that they want these projects to go forward, in large part because they're now equity holders in these projects. There's a significant economic opportunity for them to improve the well-being of those in their communities, and that's an enormous benefit to them. They want that benefit, so they should be given that benefit.
In terms of provinces, I think it's province-by-province, but there are many provinces that are fully prepared to work with the federal government on expediting regulatory frameworks in order to build more infrastructure and so that we can move product to market.
4:10 p.m.
President and Chief Executive Officer, Canadian Gas Association
Not all of them are, but yours is.