Natural Resources Committee on June 8th, 2006

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Bevington, and thank you, Mr. Minister.

We've come to the end of the first hour, and as we indicated earlier in the scheduling, we were pleased to get the minister to come this early in the mandate, and I'm pleased that you were able to fit it into your schedule to give us an hour today.

As I indicated at the outset, the officials will remain for the final hour. Because we did go considerably overtime in the first round of questioning, I wonder if I could ask you to finish the round and take a round of questions from this side of the table before you leave.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

Yes, I would be happy to. I think we could stay for another five to ten minutes.

[The Chair, Conservative, Lee Richardson]

Mr. Allen.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

That's great, thank you.

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

Thank you, Mr. Chair.

Mr. Minister, welcome to the committee.

The Energy Dialogue Group made a presentation to us the other day, and I just want to pick up on that in my first question.

I'm hopeful that in the future we can take a more overall look at the environment and focus on climate change, including greenhouse gas, including sulphur, including particulates, and not just on the one aspect called Kyoto. But it seems that one aspect of this that we haven't fully appreciated over the last number of years-and may not, quite likely, in successive governments--is the linkage between energy and the environment. What are you doing tangibly, right now and in the future, to make sure we keep these departments linked? I'm always worried about silos and wasting taxpayers' money on programs.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

That's a great question, and you know, that has been a problem in the past. Without looking backwards, the gears of the two departments weren't meshing as they needed to mesh as you move forward. They're linked so integrally that it's the only way to actually get results and move forward.

I can tell you that I meet with the Minister of the Environment on a regular basis, every single week. I'm also pleased that it's not just at the ministerial and our staff levels, but it's also at the departmental level. The deputy and both the ADMs, Margaret and Howard, have been reaching out and have made great strides with their counterparts at Environment Canada, who have done so as well. We have sent a very clear direction that this needs to happen. This is something that both sides have been keen to say, you know what, if we're going to make this happen, this is where we need to move forward.

Just to give you some concrete examples, officials who work in my office have gone out and met with some of the industry folks in the energy sector, some of the large final emitters up in the oil sands, and they've gone as a group. They've gone as staff from both Environment Canada and Natural Resources Canada; they've gone collectively to sit down and say, we need to move forward on these files. It hasn't just been Natural Resources; it hasn't just been Environment Canada. It was very well received.

So all the right things are happening and we're going to make sure they continue to happen. It's happening at the staff level, at the executive level in both departments, and at the ministerial level. As a result of that, I think the big winners will be the Canadian people, the environment, and the industry itself.

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

Following up on that, we saw last week with the heat wave here in Ottawa that if the energy suppliers in the eastern U.S. had experienced a similar heat wave, we would have had a problem from the margin standpoint on energy. I know that a number of electric utilities in Canada are facing that as well, to the point where we have to create supply over the next number of years.

You certainly indicated that there are some real short-term, low-hanging fruit on the efficiencies and conservation side. What can we do to move quickly on those programs to ensure that we don't end up with shortfalls?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

It is a problem, and even more specifically in Ontario. It's something on which I have met with the provincial minister from Ontario to discuss this file. At the end of the day, the supply side of electricity is a provincial responsibility in every single province, but we recognize some of the strains that are put on the system. Here in Ontario, it is something that I believe is behind and needs to be looked at, and if there's any way our department can support the province in helping to find some short-term solutions for this, as we move forward.... We all remember the brownouts that happened here in Ontario only a few years ago. It's not impossible that they could happen again. So if there are ways that we can work with the province, we'll be there to support them.

At the end of the day, on the supply side of electricity and energy in different regions of Canada, I believe there are opportunities for increased wind capacity and solar production. I believe nuclear is a clean form of energy that emits no carbon dioxide gases. With hydroelectricity, there are opportunities for growth and expansion in certain parts of the country. As well, there's clean coal technology. These are all parts that will be part of our energy mix. We want to use technology where we can to ensure we have the cleanest form of energy, and we'll support the provinces in any way we can to ensure they have the security of their supply.

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

We talked about energy efficiency, and I want to get back to that because I think it's important, because lowering demand is the ultimate objective we want to achieve. We know that we want to try to cut down the administrative overhead or burden on these programs, so when your department is evaluating some of these programs, what kinds of numbers is it looking at when it draws a line that says a program is effective and cost-effective? What kind of overhead percentage do you think is realistic for us to invest in from an administrative standpoint, before a program makes the cut?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

The higher the administration, one could argue, the less impact it's having on the actual environment. Right now there's a program for wind. They support wind by 1¢ per kilowatt hour, I believe, over a 10-year period. This is a very simple one to administer, very easy to monitor, very easy to figure out the amount and move forward.

I don't want to get into numbers. Some areas will have more overhead than others, but they'll have greater efficiency.

I also think it's important when we talk about efficiency to realize that efficiency cannot come just from making buildings more efficient, making cars more efficient. That's a very important part of the mix, as we see hybrids and very fuel-efficient cars, and I think we should be providing everything we can to move those forward. The Canadian people are moving in that direction--SUV sales are dropping and the sales of hybrids are increasing.

But also part of the energy efficiency side is changing how people operate, changing their mindset, making them think about energy. We waste energy in a lot of ways that we could change right now. It would be interesting to know how many members at the table leave their computers on in their offices all night. It uses a fair amount of energy. If you think about every single computer in the federal government that's left on, if they were shut down at night, how much energy would that save?

There are technologies available on our appliances; they go into a sleep mode. This is something I'm very keen on, the one-watt challenge by the G-8. Right now, your televisions are in sleep mode when you turn them off, and they're drawing 30 to 40, sometimes as much as 50 to 60 watts of electricity. There's technology available now so that when you turn those appliances off they'll draw only one watt of energy.

There are lots of ways we can promote energy efficiency, and we're going to be there to support that, to do that, to ensure it happens.

Coming back to your question, sometimes we'll have to spend more at the front end to get the big benefits at the back end, and we'll evaluate all those programs. But at the end of the day we want to ensure that the Canadian taxpayer is getting the best value for their tax dollars that we're entrusted to look after for them.

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

Thank you, Mr. Lunn.

[The Chair, Conservative, Lee Richardson]

Mr. Paradis, a very short one, please.

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

Mr. Minister ,we know how important the forest industry is to Canada. Western Canada is facing problems such as the pine beetle, while at Eastern Canada faces productivity difficulties. I understand that this is no news to you, obviously, but I'd like to know how you envision the future of this industry.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I think it has a great future and it is something this government is very committed to. As you know, in our 2006 budget we committed $400 million over the next two years to the forest sector alone--$200 million specifically allocated to the pine beetle and $200 million specifically to the restructuring of the industry and helping it meet some of its challenges.

I've met with the officials of the Forest Products Association of Canada. I'm looking forward to working with them. They've been very receptive in looking at how we can best provide services to them to ensure that this industry goes forward.

As we talked about earlier--and I won't get into this in any length--the Softwood Lumber Agreement has been an enormous weight around the neck of the forest industry, something that has caused it significant pain in recent years, and we now have an opportunity to move beyond that to give the industry the certainty it needs.

I think it's a very exciting opportunity. We have challenges in British Columbia with the pine beetle--no question about it. Natural Resources Canada is working collectively with the Province of British Columbia to support that industry, to do the research and put the investments in that are required.

I know the head of the Canadian Forest Service, Brian Emmett, at Natural Resources Canada is meeting with his counterparts in the province, and they're sitting down saying, it's not about B.C., it's not about Canada; it's about how we can best ensure that every dollar we spend complements the other, moving it forward to best help the industry.

The fact that we're making these investments, that there are people working on it, and that we're working with the provinces makes me very optimistic about where the forest industry can go in the next 10 years. This softwood lumber agreement is for seven years, with an option for two more years; it creates nine years of certainty. Throughout that period we can continue to ensure even longer certainty beyond that.

I think we have made absolute significant gains through this sector in the recent months, again, starting with leadership right from the Prime Minister and the Minister of International Trade to the Minister of Finance's committing $400 million to one industry. This is a significant amount of money to commit in a budget, and it shows our commitment to that sector.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you.

And thank you, Monsieur Paradis, for keeping that short.

Mr. Minister, again on behalf of the committee, may I offer our thanks for making this time available today. We hope to have you back when we all have more time to get into some of these matters, but that was a good start and I very much appreciate your taking the time today to be with us.

As I mentioned to the committee, the officials have agreed to stay on until one o'clock. We can follow up with you, if you would like to make a brief closing remark.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I want to thank you for inviting me, and I want to sincerely point out that I look forward to working with all members of the committee as we move forward on these files. I want to work with you; I want to hear your solutions.

As I said in my opening remarks, what Natural Resources contributes to the Canadian economy is obviously more than significant, it's unprecedented. We want to ensure that we are there, that we support the industry, but we also want to ensure that we do the right things for the environment as well.

I look forward to your suggestions and working with you in the future, and thank you for inviting me.

[The Chair, Conservative, Lee Richardson]

Thank you, again.

I thank the members for bringing out the more policy-oriented questions in the first round. We do have the officials here, and I'm sure there will be more questions that you may want to get into on details of the department's activities or other initiatives.

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

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

Thank you, Mr. Chair.

This is to whichever one of you would like to answer a question about our aboriginal population. The minister mentioned in his remarks that there is currently a shortage of some 20,000 skilled trade individuals to fill positions, on the way to perhaps 50,000.

You folks will know that the only segment of Canada's population that is on the increase is the aboriginal sector. You'll know, as well, that the unemployment rate among aboriginals is significantly higher than in any other population group.

I'm just wondering, then, particularly with respect to development in the energy sector--the oil and gas sector, in particular, perhaps mining--what concrete plans there are to stimulate economic activity in our first nations communities, because as you know, unless a community has some economic stimulus or economic activity, it isn't going anywhere.

Can you address that? What concrete steps are being taken or are planned?

[Richard Fadden, Deputy Minister, Department of Natural Resources]

Thank you, Mr. Chairman.

It's an area of interest, as you've implied, not just to the energy sector but also to the mining sector and the forestry sector. There are a variety of ongoing programs.

The aboriginal model forest program is one in the forestry area. We've had discussions over the last little while with a variety of companies in the energy area.

To be upfront with you, Mr. Chairman, I would have to say that we're now looking at this again. I was at a meeting the other day with a group of my colleagues, with the national chief of the first nations, Mr. Fontaine, and we've made arrangements that one of his executives is going to come over and have a chat so we can try to develop concrete programs about what we can do on this.

Two or three other deputy ministers and I are going to northern Alberta in a month to talk about labour shortages in that industry, and we plan to include considerations of what we can do for aboriginal communities.

With your indulgence, I would ask you to ask me the question again in the fall. We're conscious that you've raised a significant issue. There have been some things done in the past, but I think we would agree with the underlying premise that more needs to be done and we're working on something now.

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

All right.

The genesis of my question, Mr. Fadden, is that my riding of Brant, about 20 miles west of Hamilton, immediately abuts the riding of Haldimand--Norfolk, in which riding the Caledonia situation is currently taking place. So it's fair to say in a non-partisan way that our first nations people are mighty frustrated, mighty upset, and want some light at the end of what they feel has been a long, dark tunnel. Certainly, economic activity being stimulated in their communities would be of great assistance.

I'll turn then, if I may, to the minister's presentation. As I understand it, the trade surplus is $93.4 billion, which says to me, among other things, that huge profits are being made in the natural resources sector. It seems to be the case. As I understand it as well, the resource-based sector is a huge emitter of greenhouse gas emissions, so we can talk about transit passes, etc., and turning off computers, but the huge greenhouse gas emissions are emitted by the resource-based sector. What plans are afoot to have the profiteers, so to speak, do their bit collectively to combat greenhouse gas emissions?

[Richard Fadden]

Mr. Chairman, I'm not sure I would agree with the characterization of profiteer. It seems to me they're out trying to make a profit, like people in any industry. I don't remember the figures, maybe Mr. Brown does, but these industries pay significant taxes to the treasuries of Alberta, Saskatchewan, the other provinces, and to the federal treasury. In fact, if you think about it, the federal treasury benefits more from the oil sands than does Alberta, so a great many taxes are being paid today to various levels of government.

I have to be upfront with you, I cannot talk about the plans under way to see how we're going to deal with LFEs. My minister and Ms. Ambrose are in active discussions about this. As my minister said, I would expect he would be able to come back to you in the autumn with some concrete ideas, but he does recognize, as I think does Ms. Ambrose, that the oil sands do cause a particular challenge with respect to greenhouse gases, and it would be their intention to include means of dealing with it.

[The Chair, Conservative, Lee Richardson]

We're going to try to keep it to five, so you're going to be really short.

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

Not a question, just a comment.

I didn't mean, Mr. Fadden or others, to use the term “profiteers” in a condescending or sarcastic fashion; it's just a term that sprung to mind.

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you for the question.

Without limiting the scope of questions too much, I appreciate your intent in asking that, but in fairness to the deputy and to the witnesses here, we have the minister here for the policy side of questioning today. I don't think it's really fair to push these witnesses on specific policy questions; those are for the House or for the minister, when we have him back.

With that, we'll move on to the Bloc, Mr. Ouellet.

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

I'll ask Mr. Fadden my question, or maybe my question or my comment will go to....

I would've liked to question the Minister himself. However, I will make a few observations that I would like for you to relay to him.

I agree with him that to reduce greenhouse gases, we have to turn to softer energies. Nonetheless, I would remind him that there is only one energy that is absolutely pollution free, and that's solar energy. All others pollute, including nuclear energy and its waste. Where will that waste end up in 100 or 1,000 years? Even if lobbyists would like us to believe that all will be well in 30 years, we are not there yet.

If solar energy is the only non polluting energy, we would have to invest a lot of money into it. Contrary to what the minister said, solar energy is inexpensive. It all depends on what kind of solar energy were talking about. You know as well as I do that some solar panels are very affordable. Passive solar energy costs absolutely nothing. All it requires is a bit of will. Passive solar energy used to heat water is also very affordable, but it just hasn't been developed.

I would also like to remind the minister that we spend $5 million a year on R&D for solar and renewable energy, whereas we spend $500 million on nuclear energy and $2 billion on oil. There's an imbalance. When we are told that solar energy is more expensive, it's because we haven't managed to make other energies efficient yet.

I agree with him that the cheapest energy is the one we don't waste. That's very true. I was glad to hear that in his statement because we rarely do. People who come to lobby us here, such as those we met on Tuesday, don't agree with that at all. I also agree with him when he says that energy efficiency is an endless source of energy. Then why are programs like EnerGuide specifically targeted by the cuts?

There are electric engines also. A program entitled OSMCan was put in place towards the end of 2003. This program is not completed and is efficient. It was dedicated to engines running on one to 200 horses. It's a very efficient program that contributed to the reduction of GHGs because it significantly reduced the quantity of energy required to make engines run. Engines lasted a lot longer and there were much cheaper to run. This industry was largely based out of Montréal. Is it because these engines were made in Montréal that this program is targeted by the cuts? I wouldn't know.

I would've liked to remind the minister, and I'm counting on you to do so, that when he says that he will have 52 solar houses built this year, that's nothing next to what Mr. Mulroney was doing. I'm not talking about the Liberals, whom he dislikes, but of the Mulroney government. At the time, approximately 200 of those homes were built every year. I know because I was the president of SESCI back then.

So when he talks about 52 homes, it's a joke, a monumental farce. Had he tagged on two zeros at the end of that statement, had he talked about 5,200 houses a year, I would've thought he meant business. But 52 homes is a joke!

He said ground source heat is the way of the future, I agree with him, because that's the widest spread energy in Canada. But he didn't tell us what quantity he wanted to produce. In Sweden, a small country, the government announced two years ago that it would build 50,000 of those homes over three years. They weren't only talking about new homes and retrofitting like our minister. They're talking about existing houses that could be converted to ground source energy. I think this action is timid at best. Ground heating is an excellent way of reducing greenhouse gases across the country.

I would also like to point out that the Minister reminded us that a one cent per kilowatt hour of the wind energy is an efficient program. That's a one cent out of the 10.4¢ it costs to produce a kilowatt every hour of wind energy.

So why was the EnerGuide program scrapped if its overhead was only 12% of the budget? It's the same ratio, one cent over 10. He should be reminded Mr. Deputy Minister. It's important that he make the right comparisons.