Natural Resources Committee on March 24th, 2009

[Paule Brunelle, Bloc, Trois-Rivières, QC]

All right.

You mentioned in your brief that you submitted to the committee that the incentive program for thermal production does not apply to the use of forest biomass. If the program were opened up, and changes were made, what would that make it possible to do? Should other federal programs be opened up so that thermal biomass can be used?

[Jocelyn Lessard]

In fact, we feel it wouldn't take much. The program already concerns biomass, but for electricity production. It should be applicable to thermal energy production. That would be enough. Everywhere around the world, where administrations that have started to use forest biomass for energy purposes have all offered very significant incentives. In the European countries, they can amount to as much as 90%. Even in the United States, in Vermont, the schools are now heated in large part by biomass. The incentive was set at 90% so that the sector could develop.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

The financial incentives mainly apply to equipment. That means that the government can invest, but that there is a start and an end. It isn't recurring.

[Jocelyn Lessard]

That's correct. The idea is simply to reduce the return on investment period to seven years for equipment that in fact will be around for at least 30 years, perhaps even 40. Public funding is limited everywhere. For institutions to be able to invest, a grant has to reduce the profitability period to that time frame. That means that it will be profitable for those seven years, but that it will be very profitable in the future. We have to create the incentive now. The Canadian government could even consider heating its own institutions using biomass, since there is a short circuit, one of five kilometers, and a source of supply. That would be one way to send out a signal.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

That's very interesting.

Do I have a little time left?

[The Chair, Conservative, Leon Benoit]

You have two and a half minutes.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Whittaker, I'm very much interested in wind energy. In my riding, the Marmen company manufactures these enormous towers. In Gaspé, they're producing for these people.

From what you tell us, the demand is high, but the barriers to increasing quantities are significant. I remember that the public expressed its opposition by referring to the windmills as visual pollution. People from Gaspé have told us that the enormous towers were all well and good, but that they blocked their view of the river.

How do you respond to that?

[Sean Whittaker]

Thank you very much.

I'd like to cite the example of the Marmen plant, which is located in the Matane RCM. I went there a few months ago and I spoke to the mayor. She told me that, for the first time, the population had stopped declining. We see that property values have started to move back up because the Marmen plant and that of Composites VCI have set up in the region. Soon the ENERCON and REpower plants will be established there as well.

There are windmills everywhere, but if you ask people from the region if they consider them as visual pollution, they say that's not at all the case. For them, they represent job creation and hope for their region. Everywhere in public surveys, we see that the acceptance rate of wind systems is at its highest. In fact, 90% of people accept wind systems and want to have them in their area. Once they are installed, the acceptance rate even reaches 95%. My uncle worked on the roads leading to one windmill, and my brother works for the business that manufactures the rotor blades. People immediately see the economic benefits. When people see the windmills, see that they make very little noise and are not a very great esthetic nuisance, their concerns are allayed.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

What's good about forest biomass and wind energy is that they enable us to keep our regions open, to retain our populations. In Quebec, it's dramatic to see the regions being emptied of their inhabitants. We're also not using our natural resources properly.

[Sean Whittaker]

Absolutely.

[The Chair, Conservative, Leon Benoit]

Thank you, Madame Brunelle.

We'll now go to Mr. Cullen for up to seven minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to the witnesses. This is an interesting topic.

Following up on Mr. Weis's comments, I'm reminded that after the Bali conference on climate change, there was a follow-up conference on the technological side of climate change, not so much by the politicians, but by engineers and such. When walking away from that, I was amazed at how hopeful the issues of climate change and renewable energy actually were. The technical questions have been answered to a large extent. There's a good future for them. But the policy front of this Bali conference, in which principally Canada and the U.S. have played this disastrous role in stalling policy initiatives, was depressing. I think it was depressing for a lot of Canadians as well. If the problem isn't technical, it's political.

One comment that Mr. Weis picked up on earlier was on the pricing of pollution. Let's take wind as an example. You talked about long-term stability and the long-range capacity of renewables. How critical is the pricing of carbon to the industry's growth?

[Tim Weis]

It's a difficult question to answer because Canada is very different. Obviously, the different provinces have different technologies that they're competing against. The price of carbon in Alberta would be a boon to the industry, because you have a coal-based electricity system that is incredibly dirty.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I'm sorry. To correct my question, I'm asking about a national price for carbon. I don't imagine there'd be provincial pricing.

[Tim Weis]

Even if there's a national price for carbon, for example, if you install a wind turbine in Quebec, where you're competing against hydroelectricity and there's not a lot of carbon associated with that electricity, the electricity that you're offsetting has different rates of carbon associated with it. I guess it can end up favouring investment in certain areas and not other areas.

While the price of carbon is definitely important, I don't think it's necessarily the only mechanism we would need to have in place if we want to make sure that we have widespread development and development that's equal across the country. I think it's definitely key and it's definitely important to drive a lot of this development.

But at the same time, we are going to need complementary policies in jurisdictions, for example, in Quebec or British Columbia, that have large hydro bases that wouldn't necessarily be able to take advantage of a carbon price specifically for wind energy development. It's an answer that's specifically for wind energy development and not for tackling climate change as a whole.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I have a question for Mr. Whittaker.

I did look at the Pembina document. I pulled it down from the web. You've mentioned a factor of six and a half when comparing the investment rate in the U.S.'s recent stimulus package to Canada's, but on renewable energy, the factor is almost 14. That is, for every dollar Canada is spending in this area, the Americans will spend approximately $14. That's staggering if we're talking about this as part of renewal or a new economy.

My question is related to comparisons among the alternatives the Canadian government has picked up on. In trying to understand the differences between some of the renewables spoken about today and the cost of implementing an equivalency in carbon capture or nuclear power, has any analysis been done to say that the jobs created per dollar of investment in wind looks like this as compared to other energy start-ups?

[Sean Whittaker]

One of the things about wind is that it's a very human-resource-intensive industry. It requires a lot of jobs to develop wind.

Comparing the technologies is difficult in a way. If you look at where we are in Ontario, we have to replace 80% of our generating capacity within 15 years. There are very few technologies that are shovel-ready, that are ready to go, to satisfy that demand on the electricity side. Wind is one. Natural gas generation is another. And energy efficiency is the third. Carbon capture sequestration, it's generally acknowledged, will be commercial by 2020, hopefully, but in the short term, we have a real energy gap we have to make up, and wind can be a very important part of that.

Within Canada, we've developed a vision of where we think wind can go. We believe that it can satisfy 20% of Canada's electricity needs by 2025. That would incur about $70 billion of investment in Canada, and it would lead to the creation of about 55,000 jobs.

Those numbers are very difficult. I can speak for wind. It's hard for me to speak for the other technologies. If you go to a place like Germany, right now 64,000 people work in the wind industry. The wind industry is the second-largest consumer of steel in Germany after the auto industry. These are staggering numbers.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

How many folks in Canada work in the same industry?

[Sean Whittaker]

Currently 4,000 people work in the wind industry.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

So there are 4,000 in Canada and 64,000 in Germany.

[Sean Whittaker]

Yes, and there are 120,000 in Europe.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Another question is related to the term I've grown quite hateful of--shovel-ready--which is bandied around quite a bit, and the notion of how quickly we can get a project on some of the renewables started. I'll open this question to some of the projects you're talking about.

Maybe I'll focus on forestry for a moment. How quickly can the initiatives you've promoted, for which there isn't support right now, be brought forward?

[Jocelyn Lessard]

In fact, the challenge is to provide the technical expertise. In France, for example, where this sector has developed very quickly, there is an agency that advises people on the technical aspects concerning the installation and forest processes. In Quebec, the federation is doing that now, because no one else is doing it elsewhere.

If Canada wanted to set up in this business, I believe that would be the step to take. The technology has been around for a number of years now. It was developed elsewhere, unfortunately. Going to fairs elsewhere in the world, you see that the Europeans are selling their technology around the world. We're going to pay to use what they've developed.

This could be done very quickly. Within five years, we would be able to heat many of the institutions in the regions.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I have one last question.

I'm trying to understand what subsidy exists right now for wind power in Canada. WPPI transferred over to the new ecoENERGY for renewable power. We're talking about stability of the market and long-term certainty. In terms of the projects being contemplated or the contracts that have been signed but not yet built, what certainty does the wind industry have right now, in terms of federal support, of augmenting the 1¢ per kilowatt-hour? Does it exist? Does it not? I can't seem to get answers out of the government.

[Sean Whittaker]

The ecoENERGY for renewable power incentive was brought on in 2007, and it had a target of about 4,000 megawatts. It was anticipated it would last until about 2010.

To make a long story short, it was the victim of its own success. It was oversubscribed very quickly because it was a really key driver in making these projects happen, and we think it was a real feather in the cap of the Conservative government for putting it in place. But again, it became a victim of its own success.

It is currently projected that all the funds in ecoENERGY will be allocated by the end of 2009, one year ahead of schedule. And 1¢ per kilowatt-hour, it should be mentioned, is about three times less than what is currently offered in the States. President Obama, when he came in, moved extremely quickly on wind, and very aggressively, and he said they are going to extend their incentive out to 2012, saying that by 2012 they will have a carbon price that will level the playing field, but that until then they need this incentive.

So we were of the mind that it would be desirable to extend ecoENERGY to 2012 to match the U.S. government's commitment, but not to change its level—to keep it at 1¢ per kilowatt-hour—just to provide that long-term signal.

We certainly have been making the case that the long-term signal will result in jobs and direct investment. There is going to be $1 trillion that will be invested in the wind industry between now and 2020, globally. The question is what we have to do to attract a bigger part of that investment in Canada. There is no question we're competing with the United States in this respect, so the better we can do to provide a long-term signal, the more we're going to be able to attract and be able to create jobs with it.