Natural Resources Committee on June 4th, 2007

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

What's your backup resource?

[Bill Marshall]

Well, now you're into storage. You started off with the storage issue. Systems that have large hydro storage capabilities can integrate more wind than other systems. So it's the nature of the system you have.

Hydro-Québec, for instance, can integrate more wind into its system than other systems because of the long-term hydro storage it has.

In the Maritimes, we can integrate a reasonable amount of wind for a lot of the year, but the nature of the hydro we have is more from the run of the river. So when the river is running, we don't have any capability to do any storage or any utilization. So there are times of the year when it's more difficult.

In Alberta, they're facing the issue today of their very limited hydro and their limited storage capability. So the issue is that they have to back it up with combustion turbines or very expensive thermal generation to keep the system reliable.

So it's the nature of the systems. That's where I think there's an opportunity for more cooperation across the region. There's joint value between New Brunswick and Quebec. Where there's a lot of wind in the Gaspé region and wind in New Brunswick, we could utilize the DC interconnections between the two provinces and support each other to accommodate more wind across the region in a more reliable manner.

[The Chair, Conservative, Lee Richardson]

Mr. Tonks, I wonder if Mr. Campbell might want to comment on that response and on your question as well.

Mr. Campbell, did you want to add anything to that, briefly?

[Chris Campbell]

No. I think the reality is that the penetration of wind is going to be what drives the technology, the business, and the interprovincial, inter-utility business models. That will all have to be worked out for wind to move ahead the way it looks like it's going to in the next five years. The ocean energy implications in that same time period are very small. So we'll be following along and learning. And the system operators will be learning from their experience with wind and hopefully will be looking forward to a higher level of forecastability or predictability from wave or tidal later.

[The Chair, Conservative, Lee Richardson]

Thank you.

We'll go to Mr. Crête.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chairman.

Mr. Marshall, your company's mission, as New Brunswick system operator, is to monitor the reliability of the power system, and to facilitate the development and operation of a competitive electricity market in New Brunswick. You produce electricity from coal, oil, diesel fuel and nuclear energy or their emulsion.

What do you view the next ten years? Your organization may have choices to make in the future, such as getting out of electricity production from coal, oil or diesel fuel. Is the federal government sending you clear messages on this issue, allowing your executive or your board of directors to plan in the long term?

[Bill Marshall]

Pardon me, but I'll answer in English.

We actually do a projection. We do a ten-year resource plan looking forward at the system. It's a baseline plan simply to say that these are the resources that exist today with projected retirements, what's there, and what the requirements are.

But it's done under the current environmental guidelines. Now we are in the process of adding to that and doing studies to look at what we call scenario analysis, in order to go forward and make certain assumptions on greenhouse gases in particular. We know that the intensity targets...and there's a timeline for certain intensity levels in the power industry with the large final emitter trading program. But we think that's still evolving, and the regulations aren't absolutely written yet that make clear what the exact impact is going to be.

So we are going to do analysis to look at different levels of reductions in greenhouse gases.

Then what are some of the alternatives that could be put into the system? Again, we discussed this with our board of directors, and the board is very interested in what this might be. But we are not the entity responsible for the resource mix in New Brunswick. That will be the responsibility of the New Brunswick Power Corporation. Our responsibility is reliability. But to the extent that the mix of fuels could potentially have a security issue on fuel supply for different sources, we're very concerned about that, and we'd look at that.

We are doing studies on climate change, greenhouse gas emissions, and what options there are, as an information policy input to the government and others in the marketplace, so they can make business decisions as to what's likely going forward.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Would you say that messages being sent out by the Conservative government, or the provincial governments clearly lead you to choosing less polluting raw materials?

Have your company executives put off making decisions because they are unsure of the direction to take and the conditions of the possible development?

[Bill Marshall]

My understanding is that right now the province is working on a climate change strategy, and they've committed to making it public by the end of this session of the legislature. So it should be out this month, in terms of what the actual strategy is on climate change for the province.

We're doing our studies in more detail to try to put options and quantify the value of some decisions from an emissions point of view for the marketplace.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is the message that is currently being sent out conducive to speeding up the use of renewable energy, or does it rather hamper your action, because the new rules are not sufficiently known?

Do the other two witnesses have any comments to add?

[Chris Campbell]

We've had some discussions with our opposite numbers in the U.K., and we have met with the utility and financial sectors. It's fairly clear that the financial decision-makers are confused about how the rules that will affect alternate energy all across the world are going to unfold.

I must say that I see the provincial speech from the throne in B.C., the provincial energy strategy in B.C., coming out fairly aggressively. A lot of us are having a bit of trouble working out how the plans of the individual provinces that don't seem to necessarily fit together are going to work and how the provincial policies are going to fit with the emerging national policy.

At the moment, I would say that we are very much in a time of trying to work out what all this means.

[Prof. Mark Jaccard]

I'm less able than Mr. Marshall to comment on how this is affecting people making decisions about investment. I guess he's saying that he himself has to be wondering about what, for example, NB Power and its regulatory process would come up with.

I have been studying very carefully over the last month the new regulatory framework of the federal government. There's still a lack of clarity for me, but I have strong concerns about the flexibility provisions for the large final emitters. We have what sounds like a very ambitious policy of 6% intensity reduction for large final emitters—that's about half of our emissions—-over the next three years, and then it's a 2% intensity reduction going forward to about 2015. Then we're not sure what happens after that.

The challenge is that there are several flexibility provisions. One of them that seems especially large is that there's no limit to how much Canadian large final emitters can get offsets from elsewhere in the Canadian economy. That's generally what would fall into the rubric that I was alerting you to earlier, which is subsidies--subsidies for people to do something outside of that regulated sector. What will the value of those offsets be? That affects the planning that Mr. Marshall is talking about. In my own case, my concern is about the total number of emissions and what the effectiveness will be of those offsets since they are essentially subsidy programs.

My own sense, and, again, I'm not a player in this, is that the message is still quite vague about what those values will be in future—the value of carbon credits, whatever, the value of the atmosphere—and that, to me, would still be murky for investment decisions, for example, in the electricity sector.

[Bill Marshall]

May I just make a comment on that?

I tend to agree with Mr. Jaccard.

When I say we need clear targets and timelines, it's not about the intensity requirement for the next three years, or the next seven or eight years. That's a start. It's not the end of the line.

We need timelines beyond 2015 to where we're going to go. When you make decisions on power plants, these assets have 40-year lives. The decisions that are being made today for a power plant that's going in in 2013 or 2015, if it's based on the information that is available today...how can it take into account what the effect of those emissions will be in 2040 and 2050 when that power plant is still going to be operating? That's the concern for a business economic decision.

I think that's also what Mr. Jaccard is talking about in terms of these coal plants and where we have to go.

[The Chair, Conservative, Lee Richardson]

Thank you.

I think we're at our final questioner today. Mr. Gourde.

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

Thank you very much, Mr. Chairman.

My first question is to Mr. Campbell.

Tidal power energy is an emerging sector within the renewable energy industry. How do you view its role? For example, we know that wind energy is available 30% of the time, but for the time remaining, we must have access to a different source of energy. Would tidal power energy be more consistent? If not, what other source of energy would we need to balance the system?

[Chris Campbell]

For tidal, obviously, as Mr. Marshall said, we have these daily cycles of the tide flowing in and flowing out, and between the tides there is a slack period. But it is very predictable. It is possible for us to think about a number of tidal installations throughout a geographic area that would have different slack water times, so they may actually cancel out the variability in the tidal system within a region.

With wave, it's very clear that when you have a windstorm, it can blow through in 12 hours or 24 hours. A windstorm at sea may generate a wave train that will actually endure for many days, even if the wind only lasts for 12 hours. So it would be more forecastable.

The reality we are looking forward to by the middle of this century is that our electrical system will be harvesting energy from a whole number of different resource areas. And brilliant people like Mr. Marshall are the ones who are challenged to balance how we take that power and bring it together to provide a firm, reliable mix of electricity from a number of different resources.

My vision is that we in fact have all these resource opportunities available to us so that we have a significant renewable energy supply.

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

Thank you.

By definition, tidal power energy is a regional source of energy. How will Canadians, across the country, be able to benefit from this new form of energy?

[Chris Campbell]

We have significantly useful tidal reserves on the British Columbia coast, in New Brunswick, and in Nova Scotia. Smaller amounts may be in Newfoundland, and there are potentially some in northern Quebec and in Nunavut. Whether we can use the energy in the north is probably debatable. Some remote communities in the north may be close enough to tidal resources up there.

The forecast we are working with is the one that the National Round Table on the Environment and the Economy has used, and that is that there would potentially be a total of about 15,000 megawatts of wave and tidal available on the three coasts of Canada by 2050.

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

Thank you.

What is the public's perception of tidal power plants? Do Canadians adopt the "not in my backyard" type of reaction? Do those living along the coastline perceive this types of facilities in a negative light, or on the contrary, do they quite support them?

[Chris Campbell]

It's not terribly well known. We are starting to engage more in public information efforts on wave and tidal energy. I have to say that I have done quite a number of talks to community groups over the last two to three years. The Government of Nova Scotia has held community and stakeholder meetings to talk about tidal developments in the Bay of Fundy, and the reaction all of us have had is to wonder why we haven't done this before.

Having said that, I think we all have to be realistic that there's a difference between that abstract perception that this is a benign green energy source and the kind of not-in-my-backyard approach that may come forward when specific projects are being moved forward.

We do have individual projects that are being discussed with local government and with local stakeholder groups. So far, the reactions have all been very positive. They really are. Anybody who lives beside the ocean has seen the amount of energy there and asks why we didn't do this before.

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

My question is for Mr. Jaccard.

I see that you're quite realistic when it comes to the use of hydrocarbons and the need to continue using them. Earlier, you talked about how to make them less polluting. If alternative solutions were not so promising, as I have gathered, would the role of nuclear energy in a cleaner electric system be promising, in your opinion?

[Prof. Mark Jaccard]

I've studied the alternative sources of clean energy for I guess all of the last 20 years as a professor and before that as a PhD and master's student, since those were also the topics I worked on at that time. Clean energy systems is what I focus on.

What's happened to me is I've become less and less an advocate of any particular solution. I believe much more now that we should put policies in place—in my case it's for the environment—that meet our environmental objectives, whether it's greenhouse gases, or acid emissions, or local air pollution, and then see what happens. I hope you've understood that this has been the thrust of my comments here, that I think it's very dangerous when governments get overly involved in deciding as politicians that this solution—nuclear or oil or coal or tidal or wind—is better than another one. I've learned to try to be much more humble about that. Whatever I thought five years ago, new technological developments, new environmental concerns, new shifts in public preferences will prove me and everyone wrong.

I think it's much better to get the policies in place, as Mr. Marshall said as well, that are there for a long time—because we know we have a concern about a risk such as acid rain for a long time and possibly such as greenhouse gases as well—and then let other processes that have a political element to them, but also have a market element to them, determine what kind of mix we'll have going forward.

[The Chair, Conservative, Lee Richardson]

Thank you, Monsieur Gourde, and thank you again, Mr. Jaccard.

We're going to wrap it up now. I want to thank the witnesses. It has been particularly arduous to get together this time around, and I very much appreciate all of the witnesses having come on such short notice and made arrangements in the way you have. I also want to thank the clerk and the organization of the House, who were able to put this teleconference together on short notice. I know it was not without some effort on everybody's part.

Again, I want to thank the witnesses very much for taking the time today and going above and beyond on short notice to appear before us today.

With that, we will adjourn, and we'll see you Wednesday.