Industry Committee on May 4th, 2021

[Michel Chornet]

That is a good question.

I can't speak for SEMER, but, to give you some context, Enerkem takes waste after it has been composted, recycled or reused. So we are talking about everything that is not recyclable or compostable.

To answer your question more specifically, let me give you California as an example. Companies in that state are not required to reduce their greenhouse gas emissions by 2% to 3% per year, but if they do not do so, they have to pay a penalty of $200 American dollars per ton. So the requirement is an indirect one. They have the option of not doing so, but that costs a lot more than acquiring the technology they need.

You need rigour, you need the will and you need popular support, and I feel that we have that in Canada.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

But do you consider that current federal policies are sufficient or rigorous enough? Could they be improved or broadened?

The government's ambition is to reduce our greenhouse gas emissions by 40% to 45%. But we know that they have increased in the last 25 years.

Is it realistic to think that it will be feasible, given the current legislation?

[Michel Chornet]

In my opinion, Canada has a unique opportunity to meet those objectives. However, any standards or regulations must support innovation.

In California, the state standard supports innovation. For example, it recognizes renewable hydrogen, which is hydrogen produced with a renewable source of electricity. It has a standard and it provides transparency around the life cycle calculation, which is used consistently for all products industry-wide. It is able to recognize innovation and provide credits in our industry for waste diversion, for example, to account for what would happen if it were not recycled.

In my opinion, the Clean Fuel Standard being developed is an attempt to address this issue, but it needs to be more consistent. The standard needs to drive innovation, which we think California has done well, as has Europe with the Renewable Energy Directive.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Based on your response to Sébastien Lemire's question, I gather that you have been very persistent with respect to the strategic innovation fund.

I also gather that you haven't been able to secure funding from it.

Have you been able to obtain any other assistance from the federal government?

[Michel Chornet]

Over the past 20 years, Enerkem has made use of all the programs. Sustainable Development Technology Canada has certainly been a very good partner for Enerkem and we have received support from them.

With respect to the strategic innovation fund, we hit some roadblocks. The intention is very commendable, but the administrative process is onerous.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is my time up, Madam Chair?

[The Chair, Liberal, Sherry Romanado]

Yes, it is.

Thank you very much, Mr. Généreux.

Our next round of questions goes to MP Lambropoulos.

You have five minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Madam Chair, and thank you to all our witnesses who are here today to answer questions.

Ms. Sumner, I'm going to begin with you.

There's a group in my riding that advocates for the protection of wetlands in Saint-Laurent near a technopark, which I've gone to visit. It's quite beautiful. They have many different species of birds, including endangered species that consider that their home.

One of the problems the people who wanted to protect these wetlands ran into, as well as the mayor of my riding and myself, is that Parks Canada didn't necessarily consider this the natural habitat of these species of endangered birds, so that was blocking Parks Canada from taking the next step or moving forward, even though we, as a Canadian government, are trying to protect, in the last budget and in our platform, 25% of our natural lands.

Do you have any comments on Parks Canada and the way they go about protecting? What are things that stand in the way? What are ways we can improve the way that Parks Canada works in order to be able to protect more and have fewer barriers for organizations willing and wishing to protect areas?

[Janet Sumner]

You raise some very good points. I think right now we are in a place of learning from nature. As climate change is affecting our environments and shifting ecosystems, and in fact, as ecosystems are under pressure and there is less area for species perhaps to be in locations where they normally would have been, we have to start learning from species and from nature.

One of the things I'm encouraged about with Parks Canada is that I believe they are looking at some new models that they will be taking out and having a conversation with the public around the development of ecological corridors. Using a guideline developed at the IUCN, ecological corridors will be about what the ecological functions are that we find there are and how we protect them. It might not be strict protection, but it might be a more flexible tool to help us achieve some of our ecological objectives around species.

CWS at Environment Canada also has a responsibility for helping manage and protect endangered species. It might not use the tool of strict protection but other tools.

For all of us, these are unprecedented times as nature is shifting and trying to adapt. It will be important for all levels of government, and in fact, all of society to be continuing to learn in these very real, live experiments that we are seeing play out in our backyards.

I don't know the particulars of this specific case, but I would hope there could be an open dialogue with Parks Canada as they are in a learning mode and trying to bring new products to the public that can help achieve the goals around protecting endangered species, and in fact, growing habitat.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

That's amazing. That's good to know. Thank you very much. Maybe I'll push them to try again now that they're in this learning mode.

My next question goes to Mr. Fagerheim.

If we look at production versus storage, I know you mentioned that you have a great storage system for carbon dioxide and that's how you've maintained zero net emissions. What happens once the storage space runs out? I'm not a scientist. I don't really know how this stuff works, but how sustainable is this solution?

[Grant Fagerheim]

In the long term, very much so. Thanks for your question.

We have capacity right now. In the one particular reservoir, we store 36 million tonnes, as I referenced earlier. We have capacity today in that one reservoir to move an incremental 80 million tonnes, so up to about 116 million tonnes.

We have identified storage capacity of up to about 250 million tonnes on our lands in western Canada at this particular time. There's plenty of capacity in the reservoirs. There is infrastructure in place to our existing assets.

When thinking about this long term, we talk about the transition. Just so you're aware, what we do is we acquire the CO2—we don't get credits for acquiring the CO2—we sequester it, put it in the ground—we don't get credits for it—and we recycle approximately one-third of that. Let's use 300 million cubic feet a day of CO2. About 200 million a day is recycled and about 100 million is new purchases that we have to acquire at this particular time to put in the ground. We don't get credits for those.

Across western Canada—

[The Chair, Liberal, Sherry Romanado]

Mr. Fagerheim, I'm sorry, but we're really over time. I wanted to allow you to finish your explanation for the benefit of the committee, but unfortunately, we're really over time. Maybe in a subsequent round, you can elaborate a little further.

With that, we will go to Mr. Lemire.

Mr. Lemire, you have the floor for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair. You always find a way to balance the time. I thank you for that.

I will come back to Enerkem. I understand that Canada doesn't have the right regulations to ensure added value for residual material or ultimate waste. The prices could be raised to secure the resource as a raw material for you and your technology. That's the challenge of regulatory obligations.

What models are leading the way internationally, particularly in the low-carbon fuels market? People often talk about California, the United States, Catalonia and Europe.

Can you tell us about those models?

[Michel Chornet]

I can talk about them a little, although I'm not an expert.

One forward-thinking model is California's Low Carbon Fuel Standard. California has a timeline for greenhouse gas reduction, about 2% or 3% per year through 2030. They have a penalty for non-compliance of $200 per ton of CO2 equivalent. It was one of the first strict mandatory models, and it has spurred innovation tremendously. The petrochemical industry has accepted the model and is actively participating in it by seeking solutions.

Another very interesting model is the one governing all of Europe, the Renewable Energy Directive, and it has been renewed until 2030. They are already working on a renewal to 2040.

In our sector, the trouble lies in what is called the technological risk of innovation. We understand that, but to fund projects, we face a risk in terms of the market if regulations are not secure or strict. This leads to trouble with respect to financing. You can't finance projects in the traditional way. It takes a regulatory plan that goes beyond 2030 and into the future.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

As I understand it, the problem is also that companies or municipalities, for example, are not required to sell you their residual waste. It's much cheaper for them to bury their waste in a landfill or put it in a container and ship it to other countries for processing there. No one is being forced to process it here and thereby to improve the conditions for a company like yours to grow. Do I have that right?

[Michel Chornet]

That is exactly right.

Right now, based on life cycle analyses, throwing plastic into the ocean or into a landfill is considered environmentally acceptable. That's a bit absurd. The life cycle analyses give no credit for doing otherwise.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Masse.

You have two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I want to return to Ms. Sumner with regard to the national marine park.

I'm a vice-chair of the Canada-U.S. Inter-Parliamentary Group.

The U.S. actually wrote the federal government about providing monies for the Great Lakes. They're doing a lot of co-operative work at their state level and their federal level, and the Biden administration is putting more resources in there.

Would this not be an opportunity? How well positioned are we to look at something like that for the Great Lakes, especially given the fact there is a push from the Biden administration, also even from Republicans, to put more money into the Great Lakes? I'm wondering about the viability of that as one of those projects to get off the ground.

[Janet Sumner]

I actually think it's a very good idea to be looking at national marine conservation areas in the Great Lakes. When we talk about a national marine conservation area, most people think that, because of the word “marine”, we're talking about salt water, but in fact, that tool can be used in a freshwater system because it's international waters. That's what makes it possible for Parks Canada to use that as a tool for protection.

We have supported the need to see national marine conservation areas in all of our Great Lakes, including our sixth great lake, which is Georgian Bay, and we would like to see marine protection in each of those.

I think that with the auspices of the Great Lakes Water Quality Agreement needing to be renegotiated and worked on with the U.S., this would be one of the perfect times to be looking at NMCAs as a potential tool in the Great Lakes. It would work in Lake Ontario and Lake Erie, obviously, Georgian Bay, etc., in trying to move those forward.

One of the fantastic things about marine protection is that it actually grows more fish and bigger fish adjacent to that area, so it actually helps in terms of commercial fishing.

[Brian Masse, NDP, Windsor West, ON]

In terms of Leamington, which is one of the larger fishing operations in Canada, that would be a real net benefit. We're struggling with algal blooms and a few other things, but this is a very robust area for not only fishing but also processing material, so that would benefit from that type of an ecological investment. Is that what you're suggesting?

[Janet Sumner]

Certainly, if it was partnered, as well, with terrestrial protection, I think that you could do an amazing job in the Leamington area. Having grown up in London, I know Leamington quite well, so I think that just off the shores of Lake Erie would be an amazing place for a new NMCA.

[Brian Masse, NDP, Windsor West, ON]

Today I went to Point Pelee, and on the way home I got some fish from a local shop that's still open.

I think my time is up, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

With that, we will now go to MP Poilievre.

You have the floor for five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you very much.

My question is for Mr. Fagerheim, the CEO of Whitecap Resources.

Mr. Fagerheim, I'm going to read a quote from Elon Musk, who is, of course, one of the most famous renewable energy and energy transformation entrepreneurs in the world. He said, “If there was a button I could press to stop all hydrocarbon usage today, I would not press it.” Reporter: “You would not press it?” Elon Musk: “Of course not.” Reporter: “You would not press it because....” Elon Musk: “It would cause human civilization to come to a halt.” Reporter: “Every hospital would have to close down.” Elon Musk: “That would be ridiculous. It would be irresponsible to press that button. What does need to happen is to, if we can, accelerate the transformation to renewables. That's the sensible thing to do.”

That seems to be what you are doing, Mr. Fagerheim. You have invested in carbon capture and storage. You have the biggest carbon sequestration facility, deposit, in the world, and I understand that you are the head of the only carbon-negative petroleum company on the planet Earth. In other words, your company takes more greenhouse gases from the atmosphere, or avoids their being pumped into the atmosphere in the first place, than you actually emit. In other words, if your company didn't exist, there would be more greenhouse gas emissions than there are now.

Do you agree with Mr. Elon Musk when he says that shutting down oil and gas, as is the policy of the federal government, would bring civilization to a halt if it were to happen without a just and sensible transition like you are attempting to, through your investments in technology, achieve?