Foreign Affairs Committee on Oct. 25th, 2023

[The Chair, Liberal, Ali Ehsassi]

I call this meeting to order.

Welcome to meeting number 78 of the House of Commons Standing Committee on Foreign Affairs and International Development.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders; therefore, members are attending in person in the room as well as remotely by using the Zoom application.

I'd like to make a few comments for the benefit of members and our witness.

Before speaking, please wait until I recognize you by name. For those who are participating by video conference, click on the microphone icon to activate your mike, and please mute yourselves when you are not speaking.

You may speak in the official language of your choice. Although this room is equipped with a powerful audio system, feedback events can occur. These can be extremely harmful to interpreters and cause serious injuries. I would remind all the members that the most common cause of sound feedback is an earpiece worn too close to a microphone.

This is a reminder that all comments should be directed through the chair.

With regard to a speaking list, the committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members, whether they are participating virtually or in person.

In accordance with the committee's routine motion concerning connection tests for witnesses, I am informing the committee members that all witnesses appearing virtually have completed the required connection tests in advance of our meeting.

Pursuant to Standing Order 108(2) and the motions adopted by the committee on Monday, January 31, 2022, and Tuesday, May 30, 2023, the committee resumes its study of the situation at the Russia-Ukraine border and implications for peace and security.

I would now like to welcome our witness. We have before us Dr. Geoffrey Wood, who is a professor at Western University.

Thank you very much for appearing before us, Dr. Wood; we're very grateful. You will be provided five minutes for your opening remarks, after which we will proceed to take questions from the members.

[Dr. Geoffrey Wood, Professor, Western University, As an Individual]

Thank you.

I will just start with a very big-picture point of view, and then I'll focus down on some very specific issues.

The first is that we always talk about events; however, most events one has to deal with in the world are events that are repeatedly those of the human experience. I'll give you an example. Recessions, depressions and wars might be unwelcome, but there's a lot of experience in the world in dealing with them, and one knows the outcomes.

Obviously, across the world now we're dealing with events that do transcend past human experience, such as climate change. As you are all conscious, the range of consequences is enormous. We're even dealing with global pandemics and unrelated knock-on issues.

What this means is that when it comes to crises like Ukraine, the effects are greatly amplified because of the unusual times we are in. I'll give you an example. In the 1980s, there were periodic crop failures in the former Soviet Union, yet there wasn't as much of the risk of mass starvation in the world as there is these days. There's a lot more vulnerability in the global system.

We'll take the issue of Russian oil and gas exports. We are in a long energy transition. We know that as oil and gas usage is going up, the portion of it in the energy mix is declining. The last time we were in a long energy transition was the early 20th century, and how it played out was that it fundamentally rearranged the global deck chairs and led to a great deal of insecurity, depression and war. Again, one can see the amplification of effects.

What is particularly concerning today, obviously, is that the Ukrainian war seems to have entered a long period of stalemate, and with political developments potentially in the coming couple of years, which we can potentially anticipate, including south of the border, this does impart a further layer of uncertainty.

To sum up, because of great structural changes in today's world, the effects of crises that obviously would have previously had effects are greatly amplified. The food security implications are much greater than they would have been years ago—

[Jean-Denis Garon, Bloc, Mirabel, QC]

I have a point of order, Mr. Chair.

The interpretation hasn't been coming through for a solid minute now.

[The Chair, Liberal, Ali Ehsassi]

My apologies, Dr. Wood. We're checking with the technicians, but evidently there are some connectivity problems on your end. If you give us a couple of minutes, we'd be grateful.

[Dr. Geoffrey Wood]

That's no problem.

[The Chair, Liberal, Ali Ehsassi]

We'll suspend.

[The Chair, Liberal, Ali Ehsassi]

Welcome back, members. We will now resume our meeting on the study of the situation at the Russia-Ukraine border and implications for peace and security.

I would like to welcome our two witnesses.

We have with us Mr. Mark Winfield, who is a professor in the faculty of environmental and urban change at York University. He is joining us from Toronto.

From the Canadian Global Affairs Institute, we have Joe Calnan, manager, energy security forum, who is joining us from Calgary.

We're very grateful that you could join us.

You will each be provided with five minutes for your opening remarks, after which we will go to the members for any questions that they wish to pose to you. I would just ask, since you are doing this virtually, that you look at the screen, because when you're very close to your time limit, I will hold this card up. If you do see that sign, I would be grateful if you would wrap up your remarks as soon as possible. That's not only for your opening remarks; it's also in response to questions put to you by the members as well.

We will start with you, Mr. Winfield. You have five minutes. The floor is yours.

[Dr. Mark Winfield, Professor, Faculty of Environmental and Urban Change, York University, As an Individual]

Thank you, Mr. Chair.

I'm very grateful to have the opportunity to appear before you today. I would rather be here in person too, but the logistics were not going to work.

I'm going to dive right in and note that the unprovoked Russian invasion of Ukraine in February 2022 and the subsequent war are likely the most significant exogenous events we've seen affecting global energy markets and supplies since the 1970s.

The most prominent elements have been the shutdown of Russian natural gas and oil supplies to western Europe as a result of a combination of sanctions and embargoes, and this, among other things, has shattered European assumptions that economic ties to Russia, particularly via energy, would make a war of the kind that's happened in Ukraine impossible.

These developments have major implications for energy and climate policy in Europe and North America. For Europe, this situation has raised major questions around energy security, geopolitical risks associated with non-endogenous energy sources, and challenges around climate policy and energy transitions. North America is less affected in energy security terms, but there are other outcomes there as well.

The European response has been twofold. One was a very short-term effort to secure supplies, particularly of liquid natural gas from international markets, and also to retain and marginally expand the roles of coal and, to a lesser extent, nuclear energy sources.

In the longer term, the intention is to double down on the existing energy transition in the theme of decarbonization and to emphasize the roles of renewables and energy efficiency. That's partially because these are energy sources that are not subject to geopolitical risk.

From Canada's perspective, we have drawn considerable interest and pressure from our U.S., European and Asian allies as a potential geopolitically secure provider of primary resource commodities, particularly liquid natural gas, critical minerals and, to a lesser extent, hydrogen.

I'm going to be looking at this through two potential lenses. The first one is the capacity to actually make significant contributions, and the second is around the nature of the trade-offs and the risks from a climate, environmental, economic and indigenous reconciliation perspective that that might be associated with those pathways.

With regard to fossil fuels, part of the problem here in the short term is there is no real export capacity for oil or natural gas, or hydrogen for that matter, to Europe. All of the routes for natural gas and oil run through the United States. There are pipeline infrastructure projects under way, notably the Trans Mountain pipeline and the Coastal Gaslink pipeline, which might provide some export capacity, although those are very clearly oriented towards Asia.

It is also important to keep in mind that the European interest in LNG and fossil fuels is likely short term. The long-term plan is decarbonization, focused on renewables, and that may mean there isn't much of a market to justify major infrastructure investments on Canada's side.

There are similar questions around hydrogen and whether there is an economic rationale for hydrogen production in Canada and then export to Europe. It may be much more efficient to do electrolysis in Europe.

There is interest around critical minerals, although these markets are very fluid, and what role Canada will actually play at a global scale is still unclear.

Battery technologies and chemistries are also changing very rapidly in relation to electric vehicles.

The timelines for development of major new mineral projects, regardless of what happens with the Impact Assessment Act, are going to be long.

In terms of the key trade-offs, our fossil fuel export options, which are basically B.C. liquid natural gas and oil sands oil, are very carbon-intensive, and major export increases would raise questions about an ability to meet climate targets. The current plans would rely very heavily on carbon capture and storage, both for fossil fuels and natural gas, and also around hydrogen as well. There are ongoing debates about the effectiveness and the costs of that.

With regard to critical minerals, new extractive projects would be of very high impact. Much of the resources are in the boreal forest in the Hudson Bay and James Bay lowlands. These are globally significant carbon sink and storage sites, and also globally significant biodiversity sites as well. There would also be major implications in these regions for indigenous people and around reconciliation.

I think there are potentially lots of trade-offs in this conversation for Canada that we will want to think through very carefully, as the situation remains very fluid in terms of how energy markets are going to shake out in the long term.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Mr. Winfield.

We now go to Mr. Calnan. You have five minutes for your opening remarks.

[Joe Calnan, Manager, Energy Security Forum, Canadian Global Affairs Institute]

Mr. Chair and members, thank you for the invitation to appear today.

In my opening remarks, I would like to emphasize that it is in Canada's national interest to support our allies and our European and Asian partners by providing them with access to Canadian energy.

Europe has been the primary target of Russian economic warfare through the manipulation of energy supplies and will require further assistance over the coming decades, not only to ensure that Ukraine wins this war but also to enable the reconstruction and integration of Ukraine into the European Union. If Europe fails to do so, in part because of our lack of support, the resulting Russian victory will undermine the international rules-based order that Canadian security and trade depend on.

I would like to underline three important points concerning Canada's role in the global energy system.

First, Canada is a firmly established player in the international supply of many fuels, including uranium, natural gas and, of course, oil. Our role in the security of the global energy system is often masked by our broad energy integration with the United States, but our influence will become more visible upon the introduction of major new energy export facilities in British Columbia.

Second, notwithstanding Canada's strong role in maintaining global energy security, the federal government can do more to assist the European Union in its REPowerEU plan and eliminate the influence of Russian fuels in Europe's energy systems.

Third, although Canada has a variety of policy options to assist projects meant to support Europe, Canadian foreign policy priorities do not guide private investment decisions. That said, the Canadian federal government has historically played a central role in improving the economics of strategic projects meant to further Canadian national interests.

These points are highly relevant when discussing Canada's future role in supplying energy to Europe.

Turning to the current situation in Europe, we should note that the European Union has proven to be unexpectedly resilient to cut-offs of Russian energy. We underestimated Europe's ability to adapt to sudden shocks and its commitment to reduce its energy usage in response to the crisis, as seen in its dramatic decline in natural gas consumption.

In sustaining much of the direct impact of Russia's economic war with the west, the countries of the European Union have demonstrated a deep resolve to defend Ukrainians from Russian aggression and to safeguard the international rules-based order. This resolve has come at a cost. The European Union's economic recovery from the pandemic has slowed dramatically as a result of the energy price spike. Energy price uncertainty has led energy-intensive industries in Europe to shift investment elsewhere. NATO's European members currently face the daunting prospect of helping to ensure Russia's defeat in Ukraine, followed by Ukrainian reconstruction and integration into the European Union, while undergoing persistent economic stagnation.

How can we assist our allies in Europe? To an extent, Canada is already helping. Current Canadian energy supplies provide a powerful buffer against supply disruptions for many fuels and critical minerals. Canada exports nearly as much oil to the United States as Russia exported to Europe prior to the beginning of the war. That said, the federal government can and should encourage the Canadian energy industry to do more, including on the supply of oil, liquefied natural gas, critical minerals and hydrogen.

The future of Canada's support for Europe depends on infrastructure and initiative. Canada has the resources required to meet Europe's needs, but these resources are far from where they are needed. For example, a major complication for LNG export out of the east coast is a lack of pipeline infrastructure connecting Canada's natural gas grid to the Maritimes. Efforts by the federal government to connect the maritime provinces with our gas grid could come with a triple benefit of improving local energy security, enabling the phase-out of coal-fired power stations and improving the case for LNG export.

Canada has a long history of federal support for nation-building infrastructure. Our resources can again be marshalled in support of our allies and partners on the other side of the Atlantic. All we need is the will.

Thank you again, and I'm looking forward to any questions.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Mr. Calnan.

We will now go to the members for questions.

The first member up is MP Hoback. You have five minutes for the first round.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, witnesses, for being here this afternoon.

I'm going to start off with you, Mr. Calnan.

You made some interesting statements at the very end about Canada's ability to actually react and fulfill the requirements in the marketplace. In light of what's going on in the Middle East—we see an escalation of that war—how much more would be required for Canada to come on to the world scene to fill any voids?

[Joe Calnan]

There are significant risks associated with the current conflict in the Middle East. There are currently many analysts considering the possible impact of the ramped-up enforcement of sanctions on Iran. This would occur in case there's a northern front opening for Israel, in which case there may be ramped-up sanctions on the export of oil from Iran, which is currently facing secondary sanctions from the United States. However, the full enforcement of these sanctions has been relaxed somewhat over the last few years, as efforts have been made to improve relations between the United States and Iran.

[Randy Hoback, Conservative, Prince Albert, SK]

Is it fair to say, then, that there is some risk there? It's definitely a price risk.

[Joe Calnan]

Certainly.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, we've done nothing in the last eight years to alleviate any of that risk. Is that fair to say?

[Joe Calnan]

Yes, that is fair to say.

There are around 2.1 million barrels per day of Iranian oil exports that are subject to these sanctions, but they are currently being exported nevertheless. If this oil is taken off the market, then there would be a substantial impact on global energy prices that would likely tip the world into a global recession. However, the possibility of this happening is slim, due to the major economic impacts that would likely occur.

[Randy Hoback, Conservative, Prince Albert, SK]

If Iran is a major culprit in what's going on in the Middle East and is providing arms for Russia—I think that's fairly well proven too—the money that's made from the oil being shipped out of Iran is actually being used against Ukraine and is being used against Israel at this point in time. Is that fair to say?

[Joe Calnan]

Certainly you could say that the current exports of oil from Iran are supporting the Iranian regime and for sure providing opportunity to support Russia in its war on Ukraine, although there are major questions about whether Iran would be doing so anyway if the full pressure of sanctions were put on it again.

[Randy Hoback, Conservative, Prince Albert, SK]

That's fair enough, but if Canada were able to increase its capacity to get oil to tidewater instead of just shipping it to the U.S., we could displace that and create a scenario in which there would be less reliance on Iran or other countries for oil requirements. That would definitely impact back into Europe, right?

Is that fair to say?

[Joe Calnan]

Yes. I'd say that the Trans Mountain expansion, which will provide around another 690,000 barrels per day into the Pacific market, could provide a good relieve valve for this cut-off of exports from Iran.

However, this wouldn't completely patch the hole. In terms of short-term infrastructure requirements that would be required in this front, it would be more likely that Saudi Arabia would step in to manage the loss of production from Iran. However, there are also concerns there around the possible goal of the Houthian insurgency in Yemen, which has previously attacked Saudi Arabian oil infrastructure. There's a possibility that something like that could happen again, if Iran chose to escalate this into a more regional conflict.

[Randy Hoback, Conservative, Prince Albert, SK]

Europe could have a fairly cold winter if some things go wrong. Is that fair to say?

[Joe Calnan]

In terms of home heating in Europe, it currently has a—

[Randy Hoback, Conservative, Prince Albert, SK]

I mean as far as energy requirements are concerned.

[Joe Calnan]

Pardon me?