Natural Resources Committee on Oct. 31st, 2006

[Gordon Peeling]

There's nothing specific that I understand with respect to the oil sands, but I'm not an expert in that sort of financial aspect.

There is the accelerated capital cost allowance. Other people have suggested it's a subsidy, but as I stated earlier, it's simply a timing issue with respect to tax, and at a high price right now, the producers in actual fact, with the accelerated capital cost allowance, are being subjected to the tax and moving from the 1% to 25% royalty rate very quickly. That's why you're getting those very high numbers of government revenue—as a result of tax exposure.

I'm just trying to think. In the mining business, there is the flow-through share issue with respect to exploration. It doesn't affect the producers; it lines up future projects. It's only available to those who are in the non-producing side of the business, so it's not something that works for the producers—although I suppose in the long run you can say it does. But again, the draw to the treasury is quite minimal.

I think there's a different issue of incentives in trying to incent investment in alternative energy sources. That's quite a reasonable public policy. I'm not quite as pessimistic as Monsieur Ouellet about the timeframe in which we will see transitions to alternative energy sources in a significant way in the economy.

We're going to have coal and oil for a long time to come. The question is, are we going to have the clean coal technologies and the sequestration results that we need so as not to significantly damage or have an effect on climate. I think that's one of the real public challenges we face, because those will remain the primary energy sources.

We still need—and I don't mean to take away at all—to continue to develop wind and solar and address those issues of how we integrate them into the grids, etc. We're doing that in the mining business. We have some of our northern operations looking at wind farms to reduce the use of diesel fuel for remotely located mines. We want to take advantage of these new technologies as well, to reduce our carbon draw.

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

Mr. Chairman, I think that's the only question I had, and I know we are pinched for time today.

[The Chair, Conservative, Lee Richardson]

Yes, unless you have a final question...you still have three minutes.

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

Let me just ask one short one then, and talk about the efficiencies of wind power and solar power. From what I've been reading, it appears to me that the efficiency of that source of power is quite a distance away from being cost-effective in relation to the investment that's needed to produce that source of energy.

Let's take wind power, for example. You spoke about it earlier, Dr. Mead. It's my understanding that this is still far from an efficient source of energy to take the place of fossil fuels. Am I correct on that? If so, how far away is it from having an efficiency at a level where it's, say, comparable?

[Dr. Harvey Mead]

The reason for answering Mr. Allen with solar as the priority is that wind power will never be a basic energy source. It's not a constant factor; wind doesn't blow all the time.

Quebec is in a unique situation. There are some other jurisdictions that would be as well. Its present efficiency is about 40%. We've been working with specialists in Hydro-Québec's research lab with 20 years' experience, and presently it is perfectly viable economically. We were having a discussion over there.

The question of incentives is for other jurisdictions. It would only be equitable to let Quebec have the same opportunity, but Quebec would put them in today—proposals over the next 10 years for 1,000 megawatts a year, with an extra 5,000 megawatts possibly for export, and so on. Its efficiency is there already.

Countries in Europe are using it in a perfectly efficient way, economically and energetically, but you have to have a backup source. Quebec has that with its hydro grid. Most other jurisdictions don't have something like that.

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

Thanks, Mr. Chairman.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Peeling, did you want to add a final comment?

[Gordon Peeling]

I have one comment. There was an analysis, which just came out and is in the press today, with one of the reasons Denmark, Germany, and other countries in Europe are so successful at integrating wind power. It's partly the issue of having backup in their own systems, but in actual fact it's being connected to the international grid within Europe. When the wind dies, they can purchase from Germany or other places. When the wind is blowing and they're producing more energy than their grid can take, they can sell it and move it outside of Denmark.

When we're locked into single sources, it's this trade-off: have you got the hydro backup, or can you ease off while you've got the wind blowing, and so on?

We need a more integrated grid process to really take full advantage of the variability within the supply that wind would have for us, whereas with solar we can be a bit more predictive about it, in terms of how it's integrated and used.

[The Chair, Conservative, Lee Richardson]

Thank you again.

With that, it's a little past 5:15, and we're going to move to the motion.

I'll thank our witnesses for appearing. I hope you enjoyed the contributions as much as we did.

If there are any further questions, I'm sure we can get those in writing.

Thank you again for your appearance.

We will move now to our orders of the day, committee business, and the notice of motion from Mr. Ouellet.

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

Thank you, Mr. Chair.

This notice of motion does not concern the House. It simply aims to establish some sort of work grid or modus vivendi among us, on which we could then base our assessment of these presentations.

I am proposing this pursuant to the mission of Natural Resources Canada, as defined in the 2005-06 departmental Report on Plans and Priorities, which states:

NRCan's mandate is to develop, implement and deliver policies, programs, science and technology (S&T) for the sustainable development and responsible use of Canada's mineral, energy and forestry resources;

pursuant to the Department of Natural Resources Act, which stipulates, in section 6:

In exercising the powers and performing the duties and functions assigned to the Minister by section 5, the Minister shall (a) have regard to the sustainable development of Canada’s natural resources and the integrated management thereof;

pursuant to the definition of sustainable development in the Auditor General Act in section 21.1, which states:

The purpose of the Commissioner is to provide sustainable development monitoring and reporting on the progress of category I departments towards sustainable development, which is a continually evolving concept based on the integration of social, economic and environmental concerns.

My motion, which you have in both official languages, therefore reads as follows:

That the Committee acknowledge the analytical framework to be used by the Committee in its work be that of sustainable development, which gives equal consideration to economic development, social equity and environmental conservation.

It should not be too difficult, but it would be a good idea to establish a framework that corresponds to the legislation established for Natural Resources Canada.

[The Chair, Conservative, Lee Richardson]

Is there any debate?

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

Mr. Chair, with all due respect for my colleague, I seem to remember that, at the first committee meeting held this fall, we clearly established the committee mandate, which specifically covered these points.

I do not see the relevance of this motion. I find it redundant. If we want to study certain questions, such as economic development or social equity, all parties are entitled to inform the clerk of any witnesses they wish to call. Studies will be conducted in this way. I therefore do not see why we would adopt a motion to this effect, given that our mandate is already clearly established.

Furthermore, you have said yourself, Mr. Chair, during your speeches that, when a witness comes to speak to us about an economic aspect, we will listen to that witness but we will not ask his or her opinion on any other matters. The inverse is true of a witness who talks about another aspect of a question that is part of our mandate, which was established at the outset.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Cullen, do you want to comment on this?

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you, Mr. Chair.

I think the motion is quite appropriate. I'm not sure it is a given, because we've had some debate in the past about whether we look at it through the prism of sustainable development or responsible development. I think the way we're looking at the oil sands is really the way we should be looking at natural resources generally, and that's in terms of how we develop natural resources in a sustainable way.

We've even heard at this table debate about the idea that if you have a mine and a non-renewable resource...it's not sustainable. I think Mr. Peeling made a very good case. Over the next 10,000 to 20,000 years, the mine is probably going to be around.

We need to make sure we understand what we mean by sustainable development. I think this is very clear. It means we have to look at how we can develop our natural resources, but that development has to be environmentally sound.

We have to look at the social considerations as well. I think that's the way the committee operates, or should be operating, without necessarily articulating it that way. It's important to put it out the way Mr. Ouellet is proposing here, and I don't think it should cause us any great hardship.

[The Chair, Conservative, Lee Richardson]

We have a list.

Madam DeBellefeuille.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Mr. Chair, I think that Mr. Paradis, Mr. Cullen, Mr. Ouellet and I are all saying the same thing. We are currently experiencing what will be proposed for the next issues. This is a good exercise with respect to the oil sands, because we are studying the three consequences as they apply to sustainable development.

Mr. Chair, this motion is meant to ensure that we will proceed in the same manner as we are now concerning the oil sands, for future issues to be studied by our committee, particularly, sustainable development. I believe it has been successful. We heard witnesses talk about the economic, environmental and social impact. It is entirely reasonable and complete. This motion is meant to ensure that, after studying the oil sands issue, we will proceed in the same manner for other studies. I believe we all agree.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

This is an interesting motion. It needs weight attached to it, of course, and it needs to be put into context.

The tar sands are a huge industry that is getting larger, and certainly the tar sands require other streams of Canadian production to make them work. We've heard that over and over again.

Essentially, sustainability is not linked solely to the site or to the product that's coming from the ground there. It's linked to a number of other things that would suggest pace and would suggest process. Ultimately, the judgment of some of these things will be based on...the sustainability will be linked to the pace of development and the processes used. That's a very complex look that you have to take at this.

I think it's correct, but to design a sustainability model for the tar sands, even within these three categories, is going to be a big job. There's no doubt about it. I think it's correct to go this way, but the resources of this committee in coming to those kinds of points are going to be a challenge.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Harris is next.

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

Mr. Chairman, I think Mr. Cullen, Madame DeBellefeuille, and Mr. Bevington really made the case. The fact is that what we're doing in examination of the tar sands is exactly the same thing Mr. Ouellet is asking us to do in this motion, and we're doing it based on the original mandate and the original framework. For that reason I see no need to change it.

We've discussed the economic development aspect of the tar sands. We've discussed the social aspects. We've discussed environmental considerations from a sustainability point of view. We've done all that under the mandate and the framework that we set out at the very beginning of this committee, and therefore I suggest that we can keep doing it under the framework we already have.

Consequently, Mr. Ouellet's motion would be redundant, considering we're already doing it.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Tonks is next.

[Alan Tonks, Liberal, York South—Weston, ON]

Mr. Chairman, I think Mr. Ouellet wrote this motion before we had the deputations today, and it's interesting that the motion actually is more applicable with respect to what we heard today in terms of varying opinions on sustainable development and the balancing that takes place in terms of trade-offs of economic against social against conservation. Mr. Ouellet should be somewhat satisfied that he sees this process more today than we have up to now. That is why he moved the motion.

I see it as a process motion. It simply says that we should attempt to be balanced, as Mr. Harris has said. The only word I would have changed here...the analytical framework encompasses a balancing of objectives, and there are always trade-offs that have to be made and decisions made to that. I don't think you can ever really give equal consideration, but you can in process. You can in terms of the kind of input you want to have. I think that's what we heard today.

Therefore, I see the motion as an affirmation of the way we should approach not only the oil sands, but also energy strategies and other issues that we are going to turn our minds to. I think it's just a reaffirmation of what we in fact are trying to do. I don't think it's redundant or academic, but from time to time you have to enshrine your first principles in your process.

Thank you.

[The Chair, Conservative, Lee Richardson]

Mr. Russell is next.

[Todd Russell, Liberal, Labrador, NL]

To differ from some of my colleagues around the table, I do believe there is an absolute need for this.

I wasn't here when there was apparently an agreement on a framework, but if I had to sit down and look at all of the witnesses who have come before this committee, I would venture to say that 80%, if not more, talked about the economics and only touched in a very obtuse way around issues dealing with the social consequences or the environmental consequences or the conservation aspects. In fact, when they discussed those issues, they only looked at them through the prism of the economics around the tar sands.

Whether it's an affirmation or not--although that would seem to be the general consensus--it is still necessary to refocus us as a committee in terms of bringing that balance. I don't see anything whatsoever out of place about the motion. I see it as necessary to refocus us in terms of our comprehensive approach.

I haven't heard the social impacts. I really haven't. We all know there are some, and we're not going to really see them in the day we're going to spend on the oil sands. Conservation and those other issues have only been touched upon; people just touch on them. We've hardly seen any expert come here to talk about conservation or environmental protection--no expert, as I would see it.

I think this is absolutely necessary.

Thank you.

[The Chair, Conservative, Lee Richardson]

Madam DeBellefeuille, please go ahead.