Foreign Affairs Committee on Oct. 25th, 2023

[Dr. Mark Winfield]

Again, this is a matter of some debate. I would tend to lean toward the industry, which, particularly given the scale of the profit margins currently in the fossil fuel sector, really should be bearing the primary cost here. That would be consistent with the principle of polluter pays.

We know that substantial support is being provided through the CCUS tax credit, but that has been a matter of some controversy. Many people have raised the question of whether that's appropriate at all, for a variety of reasons.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

In your opinion, would you consider that an oil and gas subsidy?

[Dr. Mark Winfield]

I would. I know the definition that the government released in the summer is very carefully configured to “not”, but when I talk to my classes about this, we certainly regard it as a form of subsidization of the oil and gas sector.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

Mr. Calnan, I have a question for you as well. You spoke in your testimony about our not having the infrastructure in place to provide energy to Europe. That has not been developed.

I was in Germany. I met with the German Chancellor, the head of the chancellery, just last year, and they spoke about their need for short-term energy solutions. They were not interested in a long-term negotiation for long-term energy, because they were transitioning to renewables so rapidly as a result of the illegal invasion of Ukraine.

Could you tell me how long it would take to build the resources necessary for us to get Canadian energy to Germany, Ukraine and other European markets?

[Joe Calnan]

That depends on the political will as well as the involvement of private sector actors, because if you look at the original Enbridge Mainline pipeline—back then it was called something else, and I would be able to get that information to you—it took around two years to build the pipeline from Alberta—

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I'm sorry to interrupt you, but you know the context that we're working in now with the different regulations we have to meet and the different provincial jurisdictions, which we, of course, want to respect. In the 2023 situation, do you think it would take 5 years, 10 years or 15 years, if you had to guess one of those numbers?

[Joe Calnan]

I do know that Germany, when it was under pressure, built the Wilhelmshaven LNG facility in around six months. In all the LNG facilities that were planned in Germany at the time, they were all on, say, 10- or 15-year timelines, but they were able to accelerate this project. In cases when the national interest is decided, then you can move awfully quickly.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Mr. Winfield, would you agree with the assessment that it could be done very quickly, in six months or something like that?

[Dr. Mark Winfield]

No. The import infrastructure is much more straightforward in terms of regasifying the liquid natural gas. To export, there is an enormous infrastructure that has to be constructed. You have the actual wells themselves, which are mostly in northwestern British Columbia, and the plays that are significant here. You'd then have to build the pipelines from there to the B.C. coast. You would have to build liquefaction facilities in British Columbia as well. We're starting to do that, but there's a lot to be done there.

Given the complexity, I'm not sure those kinds of time scales are really feasible around those kinds of resources.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I certainly hope Ukraine is able to be victorious much sooner than 15 years.

Thank you very much. That's all for me.

[The Chair, Liberal, Ali Ehsassi]

Thank you, MP McPherson.

We will now go to MP Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thanks to the witnesses for appearing before the committee this afternoon.

To both of you, in terms of a number of years, what would short-term and long-term energy supplies look like?

[Joe Calnan]

Mark, would you like to go first?

[Dr. Mark Winfield]

Sure.

I would generally put short-term in a five-year time frame. Longer term, we're sort of talking a decade. We've also now, with Europe, seen a very short-term time frame wheen they had to deal with getting through this past winter, and they have somewhat more structure this winter, so there are variations. I would put short-term generally as a five-year window.

[Joe Calnan]

I'm sorry, but are we talking about just Europe's energy, or are we talking about global?

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

It's generally speaking.

[Joe Calnan]

Generally speaking, the recent world energy outlook from the International Energy Agency was released, and depending on the scenario you look at, you can have major differences in terms of what the global energy system looks like in the future.

Under the STEPS scenario, we see a major decline in the use of coal globally, and this is partially or largely due to commitments made in COP26 in Glasgow to phase out the use of coal for electricity. Oil and natural gas flatline around 2028-2029, but they remain at elevated level right up until the 2050s. For oil it's a little less than 100 million barrels of oil demand per day, maybe around 97 million. That's under the STEPS scenario.

However, under the Announced Pledges Scenario, you have gradually diminishing demand. I believe it goes down to around 50 million barrels per day by 2050. Under the net-zero emissions scenario, you have demand for oil go down to around 25 million barrels per day by 2050.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

I'm from Alberta, and there are carbon capture technologies and hydrogen projects in my electoral district. There are very promising technologies in Alberta, as there have always been, in the field of energy supply, and carbon capture has been one of them.

Short-term is five years and long-term is 10 years. I think we were looking for longer than that. Five years for Europe is now a very long time due to the current situation and the developments in the Middle East.

The question is this: How much can Canada do in five years to invest in carbon capture versus looking at other areas where we don't have any hope—for example, with some other sustainable products that might be available there? Should we bet on only the winning horse and try to invest in areas where the government is sitting in order to achieve this goal?

[Joe Calnan]

Something that I'd like to underline is that carbon capture and storage is not exclusive to oil and gas. It's actually a technology that will be required for many different forms of decarbonization. For example, the decarbonization of cement will likely involve the use of carbon capture. The decarbonization of steel is also expected, at least to a certain extent, to be reliant on the use of carbon capture when hydrogen is not an option. There are many industrial applications in which carbon capture could be very useful.

To be frank, carbon capture and storage is a very expensive technology. Currently, it hasn't really achieved the sort of scale that solar panels, wind turbines and other emissions reductions technologies have achieved.

That isn't to say that it can't reach that level. Maybe around 25 years ago, it was unlikely that anybody would have the idea that an electrical grid could be run off solar, because solar panels were for satellites out in space. They were very expensive and very high tech. However, we achieved scale on those and were able to drive down the cost very effectively, and now they're looking like the future of our electricity grids.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Dr. Winfield, would you like to weigh in on this?

[Dr. Mark Winfield]

I'm somewhat less enthusiastic about CCUS, because we have not seen a demonstration of anything approaching the scale that would be required to make a difference on the climate side. Cost remains a big problem. There are questions about effectiveness and how sequestered things really are.

Then the other big problem is the question of geology. You can't do this in large parts of the country. If you were going to do CCUS in Alberta, it's probably relatively well suited. In somewhere like Ontario or Quebec, geological candidates are, to put it mildly, rather more limited. Those are factors. I'm concerned that we have an awful lot of eggs in the CCUS basket at the moment.

[The Chair, Liberal, Ali Ehsassi]

Thank you. I'm afraid you're considerably over time, Mr. Aboultaif.

We'll now go to Mr. Zuberi. You have five minutes.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you, Mr. Chair, for bringing us together, and thank you to the witnesses for being here today.

I want to ask some questions around global stability beyond Europe, with respect to what's happening, for example, in Africa and the Americas with the current war and within the global south. In terms of energy security, what do we see in Africa and the Americas? Can you shed any light on that?

[Joe Calnan]

After the Russian invasion of Ukraine and the related spike in energy prices, there were major cascading effects throughout South America and in Africa. Since many countries in both South America and Africa follow policies of subsidizing energy for their citizens—these are very popular policies, and this would be mainly for things like diesel, cooking oil and other aspects like that—African countries were very fiscally interested in cheap energy.

Following the invasion and the spike in the price of energy, we saw dramatic increases in the price of energy that were borne by governments—not just by individual people, but by the governments themselves. Many of these governments came under extreme fiscal pressures. This has led to many governments that were nearing bankruptcy having to approach the IMF and the World Bank for short-term loans in order to cover their losses. The IMF specifically, I believe, has demanded fairly severe fiscal programs to cut back on these sorts of energy subsidies. Of course, whenever any of these countries cut back on these sorts of energy subsidies, they often see riots, protests in the streets and general instability.

For example, in Nigeria, the government was forced to reduce fuel subsidies. There was major instability following that, and major examples of fuel theft, which were actually reducing government revenues even more, since Nigeria is a member of OPEC and has a state-owned energy company. In general, if these rising energy prices are bad for Europe, they're even worse for the global south.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you.

Dr. Winfield, if you want to add anything, feel free. If not, that's fine too.