Foreign Affairs Committee on Nov. 20th, 2023

[Trevor Kennedy]

Thank you very much.

I just returned from a trip to Japan and Korea. We had a chance to meet with many of our partners in industry and government. I'll just be very direct, in that it's not too late and there are very high expectations for Canada.

It's not just about LNG, but LNG is absolutely part of the picture. It's a case of “and”. There are three things that the world is looking to Canada for, particularly when it comes to energy: LNG, critical minerals and hydrogen. All three are critically important to our partners, whether they be in the North Pacific or in Europe. In the case of LNG, I think we understand that we would be primarily exporting to the Indo-Pacific to support energy supplies for our partners in Europe, rather than directly shipping to Europe—

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I'm sorry to interrupt, but for how long? When you say we're not out of time, how long does it take us to get the infrastructure that's available and then, in that case, how long do they want natural gas?

We've heard from the International Energy Agency that the use of fossil fuel technology is peaking in this decade.

[Trevor Kennedy]

It's a great question. Honestly, the most important point, particularly in dealing with our partners in the North Pacific, is the concept of diversification. Even if demand falls for the next 20 to 30 years, what our partners want is a safe supply from their like-minded partners like Canada. We have an advantage, through geography and also through our clean process here in Canada, to provide our resources, so if demand falls globally, there is still demand for Canadian LNG, and also other Canadian resources, so I think it's important to make that distinction.

Currently we don't export any LNG to countries like Japan. LNG Canada has critical national security importance to Japan. We heard—

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I'm sorry to interrupt, but I have very little time.

We just heard that it would be very difficult for us to pay back the cost of building this infrastructure, and you are talking about the next 10 to 20 years. To your mind, is there a business case for investing in the infrastructure, knowing the short time frame we have in which to recoup those losses?

[Trevor Kennedy]

Absolutely. When we speak with industry, there is a business case. Every project has different economics behind it, but LNG Canada in particular is of national security interest to countries like Japan and Korea.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Kennedy.

We now go to the second round. We will start off with MP Aboultaif.

You have three minutes.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you, Chair.

The International Energy Agency forecast a peak in the global demand for coal, natural gas and oil, and the U.S. increased exports of LNG to Europe in 2022, relying on Canadian natural gas to compensate. Why is the United States increasing its LNG exports?

The question is for Professor Mousseau.

[Normand Mousseau]

Basically, the reason is that we have a lot of shale gas and we're able to produce it in large quantities. Europe took a quick look around, and the U.S. was able to meet the demand.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Do you agree that Canada's increase in exports of natural gas could reduce greenhouse gas emissions? Why or why not?

[Normand Mousseau]

Actually, LNG is shipped as far as Japan. Studies by the U.S. energy agency show that the emission reductions are negligible in relation to coal.

LNG doesn't really have any environmental benefits, especially when it's derived from shale gas.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Why is the U.S. compensating for the export of its LNG with Canadian natural gas, then?

[Normand Mousseau]

Because it can be bought cheap.

Canada basically has only one customer for its energy, the U.S. That means the customer decides the price and what happens in the market, not the seller.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'd like to hear Mr. Kennedy weigh in on the same question, please.

[Trevor Kennedy]

I'll just repeat my previous remarks about how we understand that there is significant interest and there is a business case. International investors have expressed their interest in investing in Canada if we have the right regulatory certainty and predictability in Canada and if there is a clear signal that such investment is welcome here.

I also want to add one other point I didn't raise about the three areas in which there's interest. There's also interest in nuclear. Canada is a source of nuclear fuel but also technology for SMRs and more conventional nuclear electricity.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Professor Mousseau, you note that Canada is the only G7 country whose greenhouse gas emissions have increased since 2010, which means this is an indirect call for a reduction in Canada's export and production of energy products.

If Canada has to decrease its oil and gas production and exports to meet emissions targets, would you expect other producers to increase their production and exports in light of increasing demand nationally or internationally?

[The Chair, Liberal, Ali Ehsassi]

I would ask that you limit your response to 20 seconds.

[Normand Mousseau]

If the rest of the world works towards its own targets, demand will drop everywhere.

Therefore, foreign partners won't step in to make up for Canada's reduced production.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Aboultaif.

We now go to MP Alghabra.

You have three minutes.

[Omar Alghabra, Liberal, Mississauga Centre, ON]

Thank you very much, Mr. Chair.

I want to thank our witnesses for being here today.

I think it's clear that there's a consensus, at least an intellectual one, that we are in a transition period and we need to reduce emissions to combat climate change. However, with the war in Ukraine, with supply chain challenges, and with the rising cost of living, we appear to be dealing with a perceived conflict. There are those who are saying that in order to deal with all those challenges.... Their resolve to transition is weakening and they're advocating for traditional methods of production or transportation.

I'm interested in hearing from Mr. Mousseau or Mr. Charlebois and having their points of view on this issue. We have to have a fundamental discussion about tackling the challenges that we're facing today, but also on the issue of climate change and our production methods.

Mr. Mousseau, go ahead.

[Normand Mousseau]

The problem is that climate targets won't magically be met.

Meeting climate targets hinges on wanting to reduce greenhouse gas emissions. Nothing outside the country is going to bring down our emissions. It requires real will and a plan to get there.

In addition, we are subject to external unknowns that make things easier or harder, in terms of pricing and so forth. It's a political decision. If we want to meet our targets, we have to accept that sometimes things will be tougher. We also need to be flexible and responsive.

That's how we need to view the transition. We can't see it as something we experience from the outside, like the crisis in Ukraine or other tragedies that occur.

[Omar Alghabra, Liberal, Mississauga Centre, ON]

Go ahead, Mr. Charlebois.

[Dr. Sylvain Charlebois]

It's a great question.

I just want to add to Mr. Mousseau's comments.

I agree with Mr. Mousseau. I think there needs to be some political will. Also, the way measures are communicated needs to change. We are seeing a number of policies helping industry to decarbonize, and I think we need to decarbonize as much as possible. It is a priority for agriculture and agri-food. Climate change is the number one threat to agriculture, no doubt; however, mechanisms that are put in place would require measurable results. I'm thinking specifically about the carbon tax right now. We need measurable metrics allowing Canadians to understand why we're doing things to decarbonize the economy.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

We now go to Mr. Bergeron for a minute and a half.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

According to the International Energy Agency's most recent energy outlook, released in October, global demand for coal, oil and natural gas is expected to peak this decade. After the report's release, the agency's executive director, Fatih Birol, said that, with the ongoing strains and volatility in traditional energy markets currently, claims that oil and gas are safe or secure choices for the world’s energy and climate future look weaker than ever.

What do you think, Mr. Mousseau?

[Normand Mousseau]

I'm not a climate change expert, but it's clear that we won't be able to meet our climate targets if we consume more gas, oil and coal.