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.