Natural Resources Committee on May 9th, 2007

[Dennis Bevington, NDP, Western Arctic, NT]

You have the total energy produced by electricity going up by almost 70%, and you've maintained about the same proportion of it being produced with carbon dioxide emissions. Unless you accept that carbon sequestration is going to be the order of the day in all of that sector.... Have you priced it into the projections you're putting into that sector?

[John McCarthy]

Yes, but first of all this is just the generation; it doesn't detail the emissions. There is an aspect in here that talks about carbon sequestration and what the effects would be if it were to be included in this.

In the triple E scenario, as I said, we put together what we thought was an aggressive policy package of different things that have been tried and used around the world, to help us do our modelling. In there is a carbon tax that's progressive over time and is included in this scenario.

All that is to say that when we do it again we'll probably have a little different configuration of the pie, and it may also be a little smaller.

One thing to note, though, is that we have a very strong momentum in this country and in the economy with respect to a hydrocarbon-based energy system. We have a lot of hydrocarbons, we use them, there's a significant investment made already in plants that are operating, and it would be difficult to change it.

[Dennis Bevington, NDP, Western Arctic, NT]

Wouldn't that suggest, if we are serious about making significant reductions in climate change, we need right now some form of national energy strategy that sets out targets for renewable energy to be produced in this country over the next number of years that will actually guide industry in a new direction?

[Avrim Lazar]

If I can just jump in this for one second, what we have to do is go from stale hydrocarbons, which are fossil fuels, to fresh hydrocarbons, which is biomass. Any sort of national energy policy that would integrate the role of biomass and other renewables with the sustained role of other carbon sources would be a useful guidance, not just to industry, but to all of Canada.

[Dennis Bevington, NDP, Western Arctic, NT]

The question I'd have for you, sir, is this. You're talking about forest products and the use of biomass. I've seen the European plants, the coal-fired plants that are running pellet streams from Canada. They're shipping pellets to Europe to maintain a clean energy balance in their plants. They don't have to retool the whole industry. They don't have to spend a lot of money on it. They just need the product in order to move ahead with it. Wouldn't you say that in your industry you need to look outside just providing the energy for your own particular internal uses and look at the larger market that exists in Canada for converting other forms of energy to biomass?

[Avrim Lazar]

And we are looking at a broader market for the biofuels. That being said, we wouldn't like to reach the point they have in Europe in which the subsidies make it more profitable to burn the wood than to turn it into paper and wood products. It's not good for jobs because there's a lot more value added, and it's not good for the environment.

[Dennis Bevington, NDP, Western Arctic, NT]

Well, there is one other question that might lead from this. We're looking at renewable fuels for putting in automobiles. At great expense we're converting a biomass or a renewable fuel into a form for motor fuel, whereas we could simply, if we wanted to reduce greenhouse gas emissions, use it in a thermal situation in other places. Don't you agree?

[Avrim Lazar]

I won't comment on that, because it's outside the range of what we lumberjacks are expert in, but probably a better thing would be to have cars that run on wood. You could stop by the side of the road, pick up some logs, and just pop them in.

[Some hon. members]

Oh, oh!

[Dennis Bevington, NDP, Western Arctic, NT]

Well, we can be facetious about this, but, I mean it's--

[Avrim Lazar]

No, I'm serious.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Bevington and Mr. Lazar.

We're going to have to move along. I'm going to go to Monsieur Gourde.

You have five minutes.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much, Mr. Chairman.

Based on your experience, can you predict when renewable energy sources will be sufficiently developed to the point where demand for traditional energy sources will decline?

[John McCarthy]

Our work has indicated that it will always be--and again, “always” is a very strong word--a mix going forward. Certainly the policy environment as well as the price environment that we're in now provides incentives in many areas, as the forestry folks were talking about, to move into more renewable sources of energy. So there isn't exactly a point in time when we start to decrease as far as our reliance on fossil fuels.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

How does the price of electricity in Canada compare to the price charged in other countries? Right now, the hydroelectric industry is more competitive than the wind energy industry. In view of competitive energy prices, if electricity costs increase over time, what kind of prices would we need to see in order for the wind energy industry to take off?

[John McCarthy]

I'll ask my colleague Mr. Modray, who has spent a fair amount of time looking at the emergence of alternative technologies.

[Bob Modray]

With respect to the first question, our electricity prices in Canada are among the very lowest in the world. We have very rich hydro resources that contribute to that.

With respect to the emerging technologies wind, biomass, what we call small hydro, and those sorts of things--and some of them are what I would call a little further out, such as photovoltaics, and on the technology side, fuel cells--the cost of these has fallen quite dramatically over the last 15 or 20 years or so. Wind is a terrific example of that. You can actually see the technology. The turbines are getting bigger, with a bigger sweep, and there's more technology being introduced for how the blades adjust to wind speed and that sort of thing. There have been advances in wind forecasting. It really depends quite a bit on the specific circumstances, but if you take the amount of energy that's produced from it, wind is quite often competitive. One of the big difficulties with wind--it's an intermittent source, as some of the other emerging technologies are--is integrating it into a grid so that it's reliable.

Even in that respect, advances are being made. That is one of the reasons we see this tremendous growth. Canada reflects what's really going on in the world. It seems we are getting fairly close to that point where it's competitive.

I was saying a little earlier that it also depends on the other sources available to you. Hydro and wind have great synergy. If you have a capability to store hydro, then when the wind is not blowing you can use hydro. It's a fairly simple example, but I think it also helps to improve those economics.

[The Chair, Conservative, Lee Richardson]

Thank you, Monsieur Gourde.

If we're quick and stick to three minutes a round, we can get another round in.

We'll have Mr. Russell, Monsieur Ouellet, and Mr. Allen, for three minutes each, please. Mr. Russell.

[Todd Russell, Liberal, Labrador, NL]

Thank you, Mr. Chair.

Thanks to the witnesses for being here this afternoon.

For the NEB, in looking at your pie graph charts, there doesn't seem to have been much change in 25 years, except in the area of wind and natural gas. Does this tell us anything about what type of electricity generation we're going to have when it comes to coal, for instance? Is there any anticipation that there is going to be cleaner coal? There are arguments around hydro and whether hydro is totally green, or just a greater form of green than some other types of electricity production. What assumptions are built in here? Is it large hydro, small hydro that you're talking about?

[John McCarthy]

Each of the scenarios has a different answer to that. For example, the “fortified island” scenario is a scenario where you look at trying to match the needs of North America in totality. It tends to promote the idea of large infrastructure. Large hydro would be part of it. Any large indigenous sources would again be favoured in that kind of scenario.

The triple-E scenario tends to provide a little more incentive for local generation and for more energy efficiency, trying to move towards reducing the demand for energy, and looking for greener sources of energy. As you can see, for example, wind is taking over, as far as 11% in that pie chart. In all cases, you see it growing, and I think that should be noted.

In our assumptions, we assumed there would be a number of projects on the books now that would be completed and implemented. For example, in the “fortified island” scenario, we have Churchill Falls power coming on, and I believe it's the 2014–2016 timeframe for that scenario. We have a number of known projects that we know are on the books, and they're included in the scenarios as they go forward.

We give a little preference further out to some of the favoured technology. There's perhaps a little more nuclear in some technology versus another. But with respect to nuclear, there are limits.

We looked at refurbishing existing sites, and we identified a few ideas that might be used for additional sites, but these take very long in the planning and in the implementation process. We're looking at a decade or so before they can actually be brought to fruition. They come in at the very tail end of the scenario.

I hope it gives you a sense that there's growth in all areas and in all scenarios. It's where the emphasis is. It changes from one scenario to another.

[The Chair, Conservative, Lee Richardson]

Thank you.

Monsieur Ouellet.

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

Thank you, Mr. Chairman.

I'd like your help in making efficient use of my remaining three minutes.

My first question is directed to Mr. Lazar. Can you provide us with a document showing the amount of electricity generated through biomass and your future projections? How many facilities do you have? You mentioned that is was comparable to a nuclear generating station. In terms of generating electricity, how does this compare to a nuclear generating station?

[Avrim Lazar]

I'm not certain that I understood your question fully, but we can certainly provide you with a document. Sixty per cent of our energy is derived from biomass, which is completely renewable. We have achieved a conversion rate of 60%.

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

How many facilities do you have across Canada?

[Avrim Lazar]

We have hundreds across the country. We are planning conversions for other facilities.

The thing that slows it down right now is we're in economic trouble and we can't get the capital. Otherwise, we'd go all the way with all of them.