Natural Resources Committee on May 11th, 2006

[Roy Cullen, Liberal, Etobicoke North, ON]

I was just told we had nine minutes, but nonetheless, thank you, Mr. Chair.

Thank you, Mr. Fadden and all your officials, for coming here on short notice.

I have a question about the economic mandate of the department, which I want to come back to, but we're having a debate in the House today on greenhouse gases, and unfortunately in the debate I think everyone is sort of saying everyone else has to do their bit, but it's not in my backyard.

We heard evidence yesterday in regard to the transportation sector. Of course, we know they're a huge contributor to greenhouse gases, but we also know large emitters are very much a part of that issue as well.

In terms of the oil sands, we've heard a lot about carbon sequestration and also about the recycling of water, that the oil sands use huge amounts of water. I've been around long enough to know it takes time to develop technologies. It takes time to implement technologies. It takes time to make sure they're commercially and technically viable. So while I have great hope that technology is going to deal with some of these aspects--the sequestration of carbon and the recycling of water--in particular in the context of the oil sands, I'm wondering if Ms. Buckley, or Mr. Fadden or whoever, could comment on the state of the technology and where we're at in the cycle in terms of putting those technologies into play.

[Richard Fadden]

I'll just comment on water, because I'd like to use a marketing ploy, if I could.

I was out at our lab in Devon, Alberta, the other day. Some of you may know that, traditionally, to produce one barrel of bitumen out of the oil sands, you have to use five gallons of water. We have a lab in Devon that has been working with industry. It used to be four to five gallons, and we now have it down from four gallons to three. So we've significantly reduced the use of water already. They're now working on trying to reduce it by another factor of 20%.

I think the bottom line is that the basic science is there, but the way to make it operational is what's going to take some time.

But the marketing effort I wanted to make with you and the chair is that, as you move to understand the department, I would really urge you to visit some of our labs. They will give you a very practical understanding, and if you do that, being able to talk with our stakeholders on whether we're doing a good thing or a bad thing might help the deliberations of the committee.

On water, for example, some efforts have been made. We have had results, and we need to do some more.

I wonder if I can defer to either Mr. Brown or Ms. Buckley.

[Howard Brown, Assistant Deputy Minister, Energy Policy Sector, Department of Natural Resources]

Ms. Buckley may very well have things she wants to add because she's a little bit closer to the actual work that we're doing at Natural Resources Canada, but I just want to comment in a general kind of a way.

There has been huge technological progress in the oil sands since Suncor started up 30 or 40 years ago. The original cost to produce a barrel of oil was something in the order of $40 and now it's down to around $20. A large part of that has come through being more energy efficient. This is kind of a continual improvement, and we have seen ongoing efficiency improvements in the oil sands.

I think there are some exciting prospects coming up. Some of the companies planning new plants, for example, are planning to not use natural gas, which is one of those non-renewable resources that Mr. Cardin was referring to; they're going to gasify the junk that's left over. That's really quite exciting as a way of expanding our available supply of energy.

I think it's fair to say that we in Natural Resources Canada, and people in industry, all see carbon dioxide capture and storage as an absolutely essential technology. We'll need to develop this over the years to come if we're going to make the exploitation of the oil sands environmentally sustainable. We're not there yet. You can capture CO₂, but it's quite costly to do it. I think bringing that cost down should be a real priority for us.

[Carol Buckley, Director General, Special Projects, Energy, Technology and Programs Sector, Department of Natural Resources]

I have nothing to add, thanks.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you.

In the meantime, we have the oil sands production more than doubling in the next few years. So I think we all have some challenges to deal with this issue.

One thing our government believes in is that everybody, including citizens, has to get involved in greenhouse gas reduction. Energy efficiency is a good part of that.

I'm not trying to put you on the spot, because I appreciate that these could be political decisions, but we've heard a lot about the 50-cent dollar with the retrofit program--I think it's the EnerGuide for Housing. I'd like to understand it better. For example, there are 50-cent dollars if it's administration or there's an audit component. I mean, if you're going to retrofit your home, there has to be a program validating that these are actually going to achieve energy efficiency and that there are actual expenditures. I think every taxpayer would understand that.

I think the bigger question, and that's what we haven't heard so much about, is whether the EnerGuide program actually produces results in terms of increasing our energy efficiency. Is it good value for the dollar? Whether there's an audit component or not, it's an interesting discussion.

I wonder if you could comment on that. What part of the 50¢ that has been in the public domain was administration and what part was audit? Did the program achieve results in terms of energy efficiency?

[Richard Fadden]

Mr. Chairman, I'd just like to take the division of the dollar element and then ask Ms. Buckley if she could take the effectiveness part.

When Mr. Lunn talked about this recently, he said that 50% is on administration. By that he meant the actual part on administration, departmental expenditures, is about 12%. The 12% to the 50% was on the audit and the post-audit. What he was trying to convey was a sense of what was actually spent on people putting in new windows or whatnot, and that was the 50%. The way it's broken down is that the department spends 12% of the dollar, then there's the audit and post-audit, and then the actual amount spent on reconstruction.

[Roy Cullen, Liberal, Etobicoke North, ON]

In terms of bang for the buck, any comment?

[Carol Buckley]

Sure. We've been delivering the program since 1998, and we have a certain number of audits that we've put into place. This program, along with the other programs that the deputy minister mentioned earlier, was reviewed by the Government of Canada in the previous government's climate change review that was started last summer. The department submitted information about how the program was operating with respect to its objectives, its partnerships, co-benefits, and so forth. That was part of a process that was run by the central agencies.

So we submitted to that evaluation of effectiveness. We didn't run that evaluation of effectiveness, and I can't really speak to it. You would have to direct your questions to the members of the central agencies--I apologize for that--who ran that review. What we can say is that we ran the program and we knew how many audits we delivered--I believe it's 230,000 since 1998--which represents, as the deputy pointed out, a portion of the money that was spent on the program. The other portions of the dollars were spent on the incentive and the technical and administration requirements.

The government may indeed feel that there are more effective instruments to use. I can speak to having had a certain delivery of it and an assessment of it, but I can't really take you any further.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you. I suspect my time is up.

I suspect part of the challenge--we had that when we were in government--is comparing the resources put into these programs and the kind of output you get in terms of results versus others. I think that's the fundamental question.

Thank you for the clarification around the 50¢.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Cullen.

Mr. Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chairman.

I would like to come back to an issue my colleague raised, namely sustainable resources. I am very familiar with the Brundtland Report. Don't you find it a bit embarrassing to qualify all these resources as being “sustainable”? All the resources mentioned in the report — oil, natural gas, uranium and coal — are non-renewable resources.

Why don't you distinguish between sustainable resources and non-renewable resources? This distinction would help allocate research funding.

You say that the solution lies in technology. However, are your technology budgets based on profitability or on the quantity of CO₂ which will be avoided? If it is the latter, let's start with solar energy and types of energy which produce absolutely no CO₂.

I was surprised to learn that only about two-thirds of the funding is spent on renewable sources of energy. It has to be embarrassing to continue to develop oil and gas — especially because of the extreme profitability of these types of energy — but even more so to spend money on research in these areas when everyone knows perfectly well that this will only contribute to increasing greenhouse gases. Even if we save that two gallons of water to produce one barrel of oil, the fact remains that we will be emitting even more greenhouse gases.

Therefore, I would like to know why you made those choices and whether you have conducted in-depth studies on liquid gas ports.

I would like to come back to the excellent question on the EnerGuide. A building cannot be considered as another form of investment to reduce CO₂, because a building requires a very long-term investment and, generally speaking, the recovery period is always too short for the investment to be profitable.

Is it possible that someone told the minister that the recovery period would be very short and that he in turn responded that this type of investment was not profitable?

[Richard Fadden]

Mr. Chairman, I'd like to address the basic question, which is how we determine which areas we will concentrate on.

I agree with you that there are several ways of doing this. However, the key factor is the almost absolute international and scientific consensus, which states that in the near future, the bulk of our planet's energy will still come from hydrocarbons. We have to work more on solar energy and tidal energy, for instance, but no one can imagine a future without hydrocarbons.

In our view, even if these sectors are extremely profitable right now, their current and future impact on society, on the environment and the economy is so significant that everyone has to do their share.

We are indeed focusing our efforts and money on new sources of energy, but we're also spending a lot of energy on fossil fuel research, because we cannot imagine a future without this type of energy. I cannot give you the breakdown right now, but in answering your colleague's question, we can try to tell you how we intend to achieve this. The basic reason is that we cannot imagine a future without hydrocarbons, and our laboratories and colleagues are focusing a great deal of their attention on how to make hydrocarbons a cleaner source of energy.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

I would like to ask you a few questions about geothermics. You talked about an international consensus. I agree with the fact that geothermics is not an option for every country. But I'm sure you'll agree with me that in Canada, the potential for geothermic energy is extraordinary. Our country is a natural for harnessing this type of energy — and very few are — and it is a magnificent opportunity for Canada.

We know that there is more energy in the ground than in all other types of energy, and that geothermics allow for thermal retrofitting. Parliament and all government offices could be powered by this type of energy throughout Canada, though perhaps less in Vancouver.

So why don't we invest huge amounts of money in geothermics? I feel that this type of energy is the way of the future. We may not completely eliminate greenhouse gases, but we could reduce them by at least 75 per cent.

[Richard Fadden]

It's impossible to give a definitive answer to that question. Have we invested in geothermic research? Yes. Do we have programs which partially promote it? Yes. Why have governments over the years not invested more in geothermics? I think it's due to history and to market conditions. It's a combination of all these elements.

I agree with your basic principle that this type of energy has potential. It's certainly a message we will remember and I will convey it to Mr. Lang.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Fadden, and thank you, Mr. Ouellet, for your views.

We have gone over our time, and before I go to the format we discussed--we'll be going over to the Conservatives--we have some changes this morning. I'm just going to take a moment to suggest that we're probably not going to have time to get to the discussion on agenda items today. In fact, we were going to have 15 minutes to talk about future meetings and setting agenda items---and I've only received a few.

I was thinking that on Tuesday we might have the Energy Dialogue Group or one of the others start. They had agreed to come on Thursday, but now we find that question period is going to be switched to 11:15 next Thursday, a week from today. So if the committee is agreeable, we might just cancel the meeting on Thursday, because I'm sure some of you would like to be at question period rather than here.

I'm trying to plan ahead here and finish this day. Maybe we'll just let you people continue asking questions until 12:45. Then we'll try to do this hybrid bus thing outside. We will defer questions of the agenda until Tuesday next week. I'd just ask everybody to submit any ideas on which witnesses they want to hear from, and all that stuff, over the weekend. Then we'll just gather that all up and do it together. There's no sense in having the clerk or me sort it all out. Let's all do it together on Tuesday, and we'll look at the agenda.

Then we have the break week. We could come back after that and start with witnesses at the end of the month. I really wanted to bring that up now for clerical reasons, and I won't hold you back any further. We can continue that discussion 10 minutes from now.

We're going to let Mr. Harris ask his question.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thanks, Mr. Chairman, Mr. Fadden, and ladies and gentlemen.

Coming from central B.C., my question is going to be about forest pests, as you can imagine. There's a broad consensus that back in the very late eighties and early nineties, when the pine beetle was first discovered in Tweedsmuir Park, had the government of the day acted in a more prudent rather than political fashion and done some controlled burning and selective clear-cutting, perhaps we wouldn't have the disaster we have on our hands now. I suppose there were some provincial regulations, and they may have had the power to make some discretionary decisions back then.

My question is about the national parks. A little more than a year ago, this little bug was discovered. It had reached the western side of Banff and Jasper National Parks, and of course now it's up in the Whitecourt area. But my question is about the national parks. What government regulations are in place? If there is a forest pest outbreak in a national park, do the government departments have the discretionary power to go in there and take whatever steps they deem necessary, even if that involves clear-cutting or controlled burns, to try to destroy a pest?

[Richard Fadden]

Mr. Chair, I think the short answer is yes. If you'll allow me to back up just a second to give an element of explanation on that, you're right when you say that to some degree, years and years ago you might have been able to do things somewhat differently.

But it goes back again to the issue of the division of responsibility. Until quite recently, domestic or indigenous bugs were thought to be the responsibility of the provinces, and bugs with passports were the responsibility of the federal government.

I think this was a bit of the problem in the sense that we had this relatively artificial division, and it complicated life. I think that division is now being dealt with more effectively; the department is now working on the development of a national pest policy to try to deal with some of these issues.

The difficulty, of course, is that in the context of the national parks it's the responsibility of Parks Canada, and they have a very strong mandate of preservation. I would venture to suggest that if you had the head of Parks Canada here they would argue that they would try to do almost anything rather than destroy the forest. But technically speaking, I do believe they would have the authority to do it.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Okay.

Now you have the Pacific Forestry Centre out in Victoria, which of course is a federal institution. At one time they used to do--I guess they call it--flyover pest observance, and I think in the early nineties the province decided to opt out of that. I don't know whether they got the money instead, but apparently there was no further flyover pest observance, to my knowledge.

In developing a national pest strategy, a forest strategy, does that mean the federal government is going to become a more equal partner in the control of forest pest outbreaks in the provinces and we'll have a larger role to play than what they've had in the last few years?

[Richard Fadden]

It's hard to say how ministers will decide, but I think that's certainly one of the options we'll be giving them. Some of the indigenous pests, in particular the one you're talking about, are now spreading beyond the boundaries of one province, and as soon as that happens, there's an easier federal role. I think you can rationalize quite easily that it makes some sense to involve yourself before it spreads across the border, thereby avoiding an issue.

I think one of the options we'll put forward is that--whoever has the lead--there has to be more coordination between the province and the federal government much earlier in the process.

I'm not trying to avoid your question; it's just that we haven't got quite that far yet.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

I understand.

I'll pass my remaining time on to my colleague.

[The Chair, Conservative, Lee Richardson]

We'll try to get two more in.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I'll take just a couple of minutes.

Thank you, Mr. Chair, and thank you, everybody, for attending.

I just have a couple of questions.

My riding is in eastern Canada. We don't have a big critical mass there, and it's dominated by agriculture and forestry. There are couple of areas that I want to push down on.

I certainly support your prudent review of programs, because I think any strategy on emissions that does not take into account particulate emissions and other health issues is missing something. So I hope that will be in the future policy initiatives.

I do see in your document that there's not much talk about agriculture and integration. As we go forward in the next couple of years--10 years, 15 years--I see agriculture as being a big contributor to our energy policy and diversification.

What are your thoughts on that?

[Richard Fadden]

The bottom line is that we agree with you entirely.

I wonder if I could ask my colleague to comment in more detail. For example, we are working on an ethanol standard; the Minister of Environment is doing that. We are spending some time, money, and effort on biofuels.

Carol, are you able to address that?

[Carol Buckley]

Mr. Chair, currently we have a number of activities in two areas where we're supporting research and program activities to further the supply of renewable fuels such as ethanol, as the deputy has mentioned, and biodiesel for applications in commercial trucking and other uses.

Our activities currently take the form of research and development to try to determine which feedstocks are the lowest cost, and get out the technical bugs, if you will. Sometimes bugs come in ways other than in the forest; they come in the use of new emerging fuels and how they interact with the technologies we need to use them in.

We also have activities that are closer to the market where we're working with the transportation sectors, truckers, and the makers of the technologies to try to determine how best these new fuels can be integrated into real life. That's further to market take-up and deeper penetration in the marketplace than the research and development activities.

So we really have activities going on in two streams, and I think they will probably continue into the future, although I don't want to prejudge where ministers will decide how moneys will be allocated. But there's definitely activity under way.

[Howard Brown]

If I could add a word, it's not just agriculture that we see as a potential feedstock, but also the forest industry, if we get cellulosic ethanol working.