Industry Committee on May 29th, 2008

[Dr. John MacDonald]

I think the question was about good ones and bad ones.

I mentioned the unsolicited proposal program. In those days, the purchasing agent was DSS, the Department of Supply and Services. You could make a proposal to DSS and they would shop it around the departments, asking, “Does somebody want to buy one of these things?” Sometimes they would and sometimes they wouldn't. We built our first ground station that way. We then dominated the world market.

The IRAP has been a granting program over the years, and it has been by far the best one. It's getting ruined now by the accountants. It's still on, but it's a mere shadow of its former self. The beauty of that program through the years that NRC ran it was that the judgments were made by scientists.

With other types of granting programs, there's so much bureaucracy to try to make sure the government doesn't get cheated that they're not efficient. A small company can't use them. They're too expensive. You can fool an accountant any day of the week, but you can't fool a good scientist, and it was the fact that the judgments were made by competent scientists.

I think the principle of contracting out research is a very important one. That develops the knowledge base close to the wealth generation. Government is a wealth-consuming organization. The universities, through their students, and industry are wealth generators.

To the whole idea of procuring R and D, I worked on a study in 1984. It was led by Doug Wright, who at the time was president of the University of Waterloo. We concluded in that study that there were only two roles of science in government. One was to maintain the regulatory knowledge base necessary in a department—and I'm thinking of bad mussels in P.E.I. and stuff like that with Health Canada—to maintain the department's competence as a smart buyer. Doing a lot of academic R and D in government really didn't have a place. Of course that is now collecting dust, and has been doing so for some time.

[The Chair, Conservative, James Rajotte]

Mr. Tak, you have about a minute.

[John Tak]

In summary, again, the hydrogen fuel cell sector is the number one clean energy R and D investor in Canada, with over $1 billion of investment in the last five years. I hope we can keep that going, and I would recommend that the government restore a policy on hydrogen fuel cells—in other words, develop a national strategy. One has been written through cross-country consultations already, and I believe if you check with the Natural Resources Canada you can probably get a copy of it. That has all the elements that Mr. MacDonald talked about: the procurement, tax, and grants. You need those three legs to make this happen. I would strongly encourage it.

We would be copying Denmark, because their next strategy for clean energy is a national hydrogen fuel cell strategy. Their energy minister announced it at our conference last year. They're a country of five million people, and they're funding that with $30 million a year. We are 30 million, and we're well ahead of the game.

So I would say, please, ask for a copy of that national strategy. Look at it. That's what's going to help us maintain our lead and help Canada make sure the benefits of all the investment we've made to date, private sector and government, accrue to Canada and not to countries overseas.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Carrie.

We'll go to Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

Boy, this is a really interesting panel. Thank you for your presentations. They're very focused, and I think your recommendations build on what we've seen and heard in other tours or panels. The fact that you are very focused is helpful for us.

I read somewhere recently that Germany is on track to create by 2012 about 400,000 jobs through green energy. It seems to me that not only is this the right thing to do, not only is this the sane and healthy thing to do, but as an economic development tool, as a wealth creation tool, as our manufacturing sector changes and evolves, this is an area Canada ought to be a world leader in.

We have such a vast geography, vast coastline, such abundant natural resources. I guess that's been a plus and a minus, because it's made us lazy, perhaps, in some areas in adapting to a green-energy future.

You've outlined some of the things you think we need to be doing. And I hear you saying we should focus on the winners, the ones that we're doing well, and build on our excellence to become world leaders in the things that we do very well. Picking those winners and those sources of excellence is always a challenge, because the one that perhaps has been a leader may not continue to be a leader.

Do you have any advice in terms of how the government, going forward, can make sure that we're not just running behind the Denmarks and Germanys but that we are in fact leaders and really exploiting the natural abundance that we have? That's a sufficiently open-ended question for you all.

[David Fissel]

Let me take the first shot at that.

I think we should look at where our strengths are right now. Canada has a lot of them in science and technology, but we are really strong--and I go back to this--in tidal and ocean wave technology. Right now we are out there right on top of the world, but if we don't do something to.... This is a 10-year to 20-year proposition. We have to seize the opportunity now and run with it.

And I think the way to pick the winners is not to look at which company is the winner but to strategically focus on the sector that's going to be to the benefit of the country on a decade-long time scale.

[Dr. John MacDonald]

You know what I'd do? I'd start using renewable energy. This is the energy of the future. I'd do an analysis. We don't have time to talk about it here, but take the Bay of Fundy project. Do it. It's very simple.

Governments can't pick winners or pick companies or even technologies for that matter. Nobody can. But there is a need. We need to generate renewable energy by various means. Certainly on this coast we have lots of tidal rapids around here, and it is similar on the east coast. Build a power generation system.

The picking of the winners will take place in the procurement process. And put in place methods of building Canadian jobs into that.

You're right about what Germany is doing. They see renewable energy as being a big part of their economy. They're an energy-poor country. We're an energy-rich country. But the same equation applies to us as applies to them. They're just getting kind of anxious because they don't have much energy and almost no clean energy aside from wind and solar, which they're building furiously. And their industry is now the world leader, beyond any question.

[John Tak]

I appreciate what John is saying, but at the end of the day, we do make choices. You have to. As individuals we have to make choices, and as governments we have to make choices. So it's not really possible to say “Let's just create a policy that lets whoever emerges win” unless you create it equally for everybody. But that is not going to happen, and we all know that. We've already seen what the U.S. is doing and what Japan is doing.

So I think what you have to look at is getting as much information as you can. The Council of Canadian Academies has a report, and it's recommended to the government what the top areas of investment should be. I'm happy to say hydrogen and fuel cells is one of the top five in that category. So use that source of information.

Look at what the private sector is doing. What is one of our national objectives? It's that the private sector pick up the burden of R and D. Okay, well look around at which sectors are investing in R and D. In the hydrogen and fuel cell sector, 85% of all R and D is private sector. That sector should be rewarded for that kind of behaviour.

So I'd use those criteria, and at the end of the day, you pick winners and losers. We've already done it with ethanol and $2.2 billion, and that's an intelligent choice based on our abundance of resources, as you point out.

So pick your top five or top seven, and then create the strategies and the policies that will support the commercialization and success of those technologies.

[The Chair, Conservative, James Rajotte]

Ms. Nash, Mr. MacDonald wants to comment again.

[Dr. John MacDonald]

When you pick a project, it fulfills a need. I'm not saying we can't find good things to do and open the door to Canadians to respond. We're going to have to have clean energy in this country. Let's get on with building it and open the door. Put in policies that make it possible for skilled Canadians to respond. That's what other people do. That's what Denmark did. That's what Germany has done. That's what the Japanese did.

The Americans have funny subsidy policies, but they also have things called “renewable portfolio standards”. It's a state-by-state thing, so it would probably be a province-by-province thing in Canada, but that mandates that the utilities have to produce a certain amount of renewable energy every year.

[The Chair, Conservative, James Rajotte]

Mr. Schubak, did you want to comment?

[Gary Schubak]

I'll be very brief. I want to reiterate something I may have already said, but I don't want to sound like a broken record.

I come from the fuel cell industry. I've been there for almost 20 years, working in that area. We have a lead in a very important area, and that's transit. Our fuel cell sector and its cooperation with bus manufacturers and integrators in that area is currently one of two offerings that are really out there in the globe right now and doing things. Our B.C. Transit program, with the Olympic Games coming in 2010, is a huge opportunity to showcase something we have that nobody else has.

Well, I shouldn't say nobody. There is another really strong contender out there, but we have a lead in this area and we should be paying attention to that lead now, because it could be a huge growth opportunity for us.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Thank you, Ms. Nash.

We'll go to Mr. Simard, please.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much, Mr. Chair.

Thank you for being here this afternoon. I have about ten questions, but I'll start with three or four. I think my first one is more a comment, actually.

When you speak about clean energy, alternative energies, I find that fascinating. I had the opportunity of speaking to the president of New Flyer Industries about a month ago. My numbers might be off a little bit, but it seems to me he told me that in 2003, 3% of his sales were hybrid or new technology. This year, 30% of the work they're doing is clean energy stuff. He has $1.2 billion of orders, and 60% of that is new energy.

We can build economies around this stuff. It is that powerful. This is the first time we've actually talked about it on our visit, so I'm very pleased to hear you speak to that.

That's more of a comment.

My question for Mr. MacDonald is this. You said you're moving towards cost parity with the grid. I'm trying to get a feel for what 100 megawatts would look like.

In Manitoba we had a wind farm, hooked up to the Manitoba Hydro grid, of 99 megawatts, and it cost $280 million, I believe. What would it cost for a similar thing in solar panels, and what would it look like physically?

[Dr. John MacDonald]

Is that 100 megawatts?

[Raymond Simard, Liberal, Saint Boniface, MB]

It was 99 megawatts.

[Dr. John MacDonald]

That's pretty big.

It's about 200 acres, roughly. With the technology at the moment, it's about 6,000 panels per megawatt, and the panels are roughly a little more than one metre square.

[Raymond Simard, Liberal, Saint Boniface, MB]

What would it cost to develop 99 megawatts with solar energy?

[Dr. John MacDonald]

At the moment, you can just multiply by somewhere between $7 million and $8 million. So for 99 megawatts—call it 100 megawatts—it would cost $700 million or $800 million.

[Raymond Simard, Liberal, Saint Boniface, MB]

So it's substantially more at this point.

[Dr. John MacDonald]

It's substantially more, but like all the renewables—or most of them, anyway—when you purchase the system, what you are really doing is buying future kilowatt-hours. So you have to amortize it over a length of time, and it gets fairly complicated.

[Raymond Simard, Liberal, Saint Boniface, MB]

And the technology evolves as well.

[Dr. John MacDonald]

Of course it does, and we have ways that we think we can creep up on cost parity. We have a long way to go.

[Raymond Simard, Liberal, Saint Boniface, MB]

Mr. Fissel, one of the things we've noticed in the last couple of days is that a lot of the federal government departments actually work very collaboratively with organizations, universities, and all that—Agriculture Canada in Winnipeg, working on nutritional foods, and Health Canada, working with the lab. So there is very good collaboration, and actually an exchange of scientists.

Is that happening with the Department of Fisheries and Oceans? It seems to me that they have the expertise in what you're talking about. Was it happening in the past? Is there something we can do when it comes to that specific department?

[David Fissel]

I'd like to say it is happening, but I think the programs in the Department of Fisheries and Oceans in the particular sector of renewable energies are not strong.