Natural Resources Committee on Dec. 12th, 2006

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Give me some examples.

[Dr. David Layzell]

For example, co-firing biomass with coal has very significant emission reductions. The technology exists. It's being used now. The reality is that it's an economic issue and a regulatory incentive issue. Coal comes in at $2 or $3 a gigajoule. Biomass costs delivered to a power plant may be $4 a gigajoule, so biomass is probably going to cost $8 a gigajoule.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Okay. Do you have any more examples? I'm going to forget those details.

[Dr. David Layzell]

Certainly ethanol works as a biofuel. The greenhouse gas benefits of our current ethanol technology aren't quite there. Lignin cellulosic ethanol is close, but it's not quite there on a commercial scale.

In Europe another one is converting biomass to a natural gas equivalent—synthetic natural gas—putting it into pipelines, and using it as a transportation fuel. If you want to compare it to the price of natural gas, it doesn't work. Natural gas is $7 a gigajoule; it's probably about $14 or $15 a gigajoule for synthetic biogas. In Europe that works, especially for transportation, because gasoline is $25 a gigajoule, so if you were using biogas natural gas for a transportation fuel, that would work.

If you want to talk about studies in Europe that have been done relating to how many kilometres you can get per hectare of agricultural land, if you're interested in that sort of productivity, that works. The problem is that if it's going into a pipeline it won't be competitive with natural gas, and it will increase natural gas demand considerably.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

You've given three good examples. Are there any long-term ones that are quite a way down the pipeline that have massive potential from a scientific perspective, if not necessarily an engineering one?

[Dr. David Layzell]

Other countries don't have the opportunity Canada has. Compared to other nations, like the United States and Europe, we have large biomass resources. We leave a lot of biomass resources on the ground as a result of our forest and agricultural sectors. In other countries they have already been using that as biomass.

They don't have the reserves we do, so they've been focusing on biomass crops, developing new crops that are specifically grown for energy. We've never done that in Canada. In fact, it hasn't been done in agriculture. Examples are switchgrass, miscanthus, and willow. They can be produced with minimal input. They're perennial crops and can produce a large biomass. To put it in perspective, one tonne of dry biomass has the same energy content of about three barrels of oil.

There are many biomass crops in Canada in many parts of agriculture that could produce 10 tonnes of biomass per hectare, so that's 30 barrels of oil per hectare. If you start looking at that, we have 30 million hectares of agricultural land in Canada. We could switch some of that agricultural land to biomass crops and bring some pasture land into biomass crops. There are seven million hectares of agricultural land that have gone out of production in the last 30 years or so that could be brought back into biomass crop production.

One could talk about 120 million tonnes of biomass per year of sustainable production with minimal inputs. That one technology, which is going to take decades to achieve because it's transformational, would provide approximately 20% of Canada's entire energy needs. We are talking about a major opportunity here.

That is the strategy the Americans are talking about and moving very strongly toward. It's a strategy the Europeans are talking about it.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

To sum everything up, what would be an effective strategy for where to put our emphasis? R and D guys have told me we're great on research in Canada; it's development that's the problem.

[Dr. David Layzell]

This is really what we see as a strength of what BIOCAP does and why we've been able to keep so many industry sponsors with us for seven or eight years now. We focus on working as a bridge between the upstream and more applied research and linking it to the needs of industry. That's really our focus within BIOCAP. Some of the technologies exist, and we put as much emphasis on taking existing technologies and communicating them and helping industries understand their opportunities, as we do on developing new technologies.

You ask what the mechanisms are. I think we do need an emissions trading system. That will provide an economic environment in which a lot of the technologies that are very close—for $10, $15, or $20 per tonne of carbon dioxide emission reductions—could be achieved. It could change animal production systems and renewal management and change how fertilizers are used. There are lots of different technologies. Co-firing could fit in there, for example. That doesn't necessarily need a trading system. It just needs a regulatory environment in order to make it happen.

Secondly, the sorts of incentives that have already been talked about by virtually all levels of government in terms of 5% fuel standards for biofuels makes a lot of sense. Green biofuels or biofuels that have a minimum greenhouse gas benefit would be especially very useful. There are lots of opportunities there, and they would really provide incentives. Those technologies are very close to implementation. If we want to see them implemented in a few years, we need that sort of regulatory environment.

We need to seriously look at forestry opportunities. We have significant problems in the forestry sector in terms of economics and the viability of that sector. We've been working with many in the forestry sector, and there's a lot of interest in the possibility of seeing forestry as an energy sector more than a traditional forest policy pulp-and-paper sector. It's going to require policy changes at the provincial level. It's going to require a coordination of the federal and provincial. It's going to require a recognition of the carbon benefits and the incentives that are not currently covered under Kyoto. It's going to require policy decisions that have to be integrated in a post-Kyoto world.

That last one is a longer-term one, but we need to start working on it now so that we know what to negotiate for in an international framework, if we want to take advantage of our hundreds of millions of hectares of forest land to really help us meet our environmental commitments.

[The Chair, Conservative, Lee Richardson]

Are you done?

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'm finished, yes.

[The Chair, Conservative, Lee Richardson]

We are running out of time. Some of those went a little long, but we'll have a quick round here, if we can.

I'll start the second round with Mr. St. Amand.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for your thorough presentations. You're pretty deft at answering the various questions.

I'm looking, Mr. Kaufman, at page 11 of your deck, “Next Steps”: “Clear signal from the federal government that CCS is part of the Canadian strategy”. Fair enough.

I then go on to read “further evaluation and planning”, “collaboration”, “support in public awareness”, none of which, with respect, reflect to me a clear signal from the federal government.

You've indicated at page 7 that “CCS should not be mandated.” My question to you is, number one, why should it not be mandated so that we can terminate the cajoling and the coaxing of industry and just force them to do something? Or, in the absence of mandating carbon capture and storage, why not impose a carbon tax to accelerate the reduction of emissions of greenhouse gas?

[Stephen Kaufman]

Thank you for the question.

With respect to carbon capture and storage not being mandated, our view is that companies need to be allowed to choose their approach to meeting climate change reduction obligations. For some companies, carbon capture and storage may be the sensible and most cost-effective approach, but for others it may not be.

If you have a wholesale mandating of carbon dioxide capture, one of the outcomes that's unintended but anticipated to happen is a huge supply of carbon dioxide that's produced, and any potential revenues that we might have been hoping to have in the system for purchasers for enhanced oil recovery will fall to zero because just simple supply and demand economics will suggest that they shouldn't pay anything for the carbon dioxide. One of the opportunities for keeping the overall cost of the system down would be destroyed in that type of initiative.

With respect to the idea of a carbon tax, we think that's a policy consideration that really goes above and beyond the purview of what our group is involved in. Each of our companies has its own respective opinions on that mechanism as a climate change approach. However, what our subgroup of these various companies has been working on is really the implementation of and the attempts to move forward on implementation of carbon capture and storage, rather than the overall climate change policy objectives.

[Lloyd St. Amand, Liberal, Brant, ON]

I understand it to mean that a carbon tax would be a clear signal from the federal government that carbon capture and storage is part of the Canadian strategy. It would trigger industry to do something about carbon and leave it to industry as to how to best reduce their own greenhouse gas emissions. That's the clear signal that your group is actually looking for from the federal government. That signal hasn't yet been forthcoming, as far as I understand the new Clean Air Act.

[Stephen Kaufman]

That would be a signal, obviously, but the signalling that we're looking for is a positive step forward, suggesting that the governments are willing to collaborate and work with us to develop the right kinds of policies that will allow for carbon capture and storage to be deployed on a large scale.

[Lloyd St. Amand, Liberal, Brant, ON]

I have no further questions.

[The Chair, Conservative, Lee Richardson]

Thank you.

We're going to have to wrap it up. Is that fine with you?

Thank you to our witnesses again for their appearance today, and for the questions. We just ran out of time.

We will now proceed to an in camera session with the committee. While we're packing up, I'd like to have distributed the draft outline that we had prepared for the committee.

Thank you again.

[The Chair, Conservative, Lee Richardson]

I really just wanted to have the witnesses move on before we got into a discussion. Apparently there's some rigmarole required to go in camera, but I don't think we necessarily have to go in camera. We just have one motion to discuss, and then we'll talk about the business of the committee.

With that, I don't think we'll bother going in camera, so I'll turn to Mr. Tonks, who has given us notice of a motion that appeared on today's order paper.

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

Do you want to read the motion, Mr. Chairman? Do you feel up to it?

[The Chair, Conservative, Lee Richardson]

I'll let you do it. It's your motion.

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

I'll read it, just for the public record:

That the Committee recognize the valuable role of the BIOCAP Canada Foundation and its partners in creating innovative programs, cooperation and research networks to move Canada toward developing its bioeconomy; and that the Committee respectfully encourages the Government of Canada to provide immediate short term funding to the BIOCAP Canada Foundation in order that it be able to meet its commitments to Canadian university research and launch its 2007-08 research programs on the bioeconomy.

Mr. Chairman, I'm going to speak very.... I think the questions that were asked by Mr. Trost in fact underscore the relevance with respect to the transformation that Canadians and in fact the world have seen with respect to trying to match the technological opportunities that are created—as in our study, for example, on the oil sands—by the production of carbon dioxide.

Mr. Chairman, the presentations made today by the ICON and BIOCAP representatives in fact are giving us an illustration of how research is in fact being bridged with the development of those technologies. Without that bridge, you simply have words and no actions. I think this committee has felt the frustration. We visit the oil sands and we see the tremendous use of technology, but we don't see evidence with respect to what's happening—as Dr. Angus Bruneau pointed out—in matching the innovative capacity, through commercialization, to sequester carbon dioxide or use carbon dioxide in the process of gasification with respect to coal, or in the production of biomass energy capabilities.

These are the challenges this committee's been studying, Mr. Chairman. I have been given to understand that there is a very great frustration on the part of BIOCAP that they are not receiving the last part of their funding, which would allow them to complete the research program they are engaged in at this time.

What I'm suggesting, and I hope the committee will support this, Mr. Chairman, is that we simply ask the relevant minister—in this case I believe it's the Minister of Natural Resources, but I think we're going to have some clarification on that—to meet the $2 million that is required by BIOCAP to meet the research and development schedule they have already embarked upon. It was understood in the original proposal call—albeit it came from another government—that they would be able to complete their research schedule that is presently going on.

When I was on the environment committee we had BIOCAP, and we were impressed at that time that not only had they received federal funding, but they'd been able to enhance that with funding from the private sector. They could see that it was in their interest to have research applied such that development would occur, so they were willing to contribute to that. I think you've seen in the handout from BIOCAP that from the $10 million public investment, they were able to leverage approximately another $27 million, for a $37 million program.

Mr. Chairman, I think it's more than an act of faith; I think it's an act of wisdom for this committee to support them in their interim request. I put that as the motion to activate that request.

Thank you.

[The Chair, Conservative, Lee Richardson]

We get it. Thank you, Mr. Tonks.

Monsieur Paradis, have you any comment?

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

Mr. Chair, I would like to suggest an amendment.

I'd like to raise an amendment at this time, if it's possible.

I have listened carefully to my colleague. I had already told him about my amendment before the Committee meeting. I will put it before the Committee so that it may be put on record.

The Minister of Natural Resources is mentioned with regard to BIOCAP. And yet, three ministers are involved in this issue, namely the Ministers of the Environment, Agriculture and Natural Resources. To begin with, the words “Minister of Natural Resources” should be replaced with “government of Canada.”

Secondly, I understand my colleague’s concerns. What worries him about this issue is the short-term financing designed to ensure that the commitments which were made are respected. Now the version that was submitted to us says the following, at the end:

“...and launch its 2007-08 research programs on the bioeconomy”.

Mr. Chair, I suggest that these words be removed because they go beyond what my colleague is suggesting. This may be done during the reflection or policy exercise, or other, but I think it is premature. If we want to respect the spirit of the motion put forward by my colleague, I recommend that you amend it as I have just suggested. By the way, I have handed out a bilingual text of the amended motion, which we will support.

[The Chair, Conservative, Lee Richardson]

Okay.

We have an amendment on the floor, so we are obliged to speak to the amendment first, unless it is accepted as a friendly amendment by the proposer of the original motion.

I will go first to Mr. Tonks, in the interests of time, and ask if that's acceptable to you.

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

It's congruent with the intent that I had in the motion, Mr. Chairman, so I see nothing that conflicts with the spirit of that motion.