Evidence of meeting #10 for Natural Resources in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was biomass.
A recording is available from Parliament.
4:35 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Cullen.
Now we will go to Mr. Trost, and maybe Mr. Allen, depending on whether Mr. Trost leaves you any time. You have up to seven minutes.
4:35 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Thank you, Mr. Chair.
It was interesting. Some of us were talking here while you were noting on that and we were looking at a bit of a list of wind power projects the government has developed for the P.E.I. Energy Corporation, Suncor, Kettles Hill Wind Energy Inc. It looks as if there are about half a dozen here. For just about 655 megawatts of capacity, the number I have for the ten-year allocation is just shy of $190 million for the projects I'm looking at here, which actually sort of feeds into the first question where I'm going.
A couple of you are talking sort of very specifically that the government should fund, subsidize, etc., certain sectors or certain technologies. Here is my underlying question. Assuming we do decide to pick and subsidize things, why should we, as the government, do a technology-based subsidy versus an outcome-based subsidy? Because at the end of the day, if I'm up in Paulatuk, Northwest Territories, and I have a diesel generator and I want the cost of electricity to go down, not in the winter, evidently, but maybe in the summer solar-based technology might work better than wind-based technology. So why would we even think of doing technology-specific subsidies?
4:40 p.m.
Vice-President, Policy, Canadian Wind Energy Association
Again, there are the two worlds. There is small wind, which applies more in the north, and large wind in the south. In the north you don't have many technology options. You've got wind and, you're right, you've got solar. It's not really a matter of picking. It's just saying that to any eligible technology.... It's similar to the ecoENERGY for renewable power program. It's 1¢ per kilowatt-hour to a range of technologies, not specifically wind. And we're advocating the same thing up north. We're just saying, listen, you've got wind and other technologies that are competing against incumbent generators, and as I said, the utilities are willing to pay you the avoided cost of diesel and nothing more, so you have to get over that hump. So provide that price signal that acknowledges that, yes, you have to get over a hump, but over the long term the cost of these will be—
4:40 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
But would you be broadly supportive of a more outcome-based than a technology-based subsidy or system? And I see some other heads nodding, so if you can answer in one or two words, then we'll take turns for some of the other people here.
4:40 p.m.
Vice-President, Policy, Canadian Wind Energy Association
One of the things it's important to note is that right now the Government of Nunavut spends about 60% of its budget on diesel subsidies. That's largely coming out of transfers, so it's a matter of avoiding that.
4:40 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
I saw some other heads nodding to answer the question.
4:40 p.m.
President and Chief Executive Officer, Canadian GeoExchange Coalition
Your question is quite interesting. If I had to answer within the context of integrated community and energy systems, I would tend to agree with you: why focus on one technology versus another? The whole concept of integrated energy systems is that we should stop looking at technologies within silos and start looking at them as a means of making us more productive on the energy side.
I disagree with Pembina about the need for pilot projects. I agree that geothermal doesn't need pilot projects, and neither does wind or any single renewable energy source. The only thing they do is demonstrate that we are able to demonstrate, but that's true only from the perspective of a single energy source. The question is, how do we integrate technologies, on a large or small scale, at the community level? We get into a situation where there's solar, wind, geothermal, and other sources. It's for every community to optimize the energy that is going into their territory, and this might need to be demonstrated on a different scale.
4:40 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
So you'd be in favour of looking at this purely on an outcome basis—letting the best technology win or the best technologies work together.
4:40 p.m.
President and Chief Executive Officer, Canadian GeoExchange Coalition
I would say we should favour the best technology mix within the community. It's probably the outcome we are all looking for. That's what QUEST is all about.
4:40 p.m.
Director, Renewable Energy and Efficiency, Pembina Institute
That is the way the current incentive, ecoENERGY for renewable power, works. It's not specifically for wind; it includes other technologies. But there is sometimes an advantage in targeting certain technologies if you want to try to spread them around geographically. That's what Germany has done. They've actually given higher incentives for where you have a lower wind regime, so it helps spread out the technologies so that not all of the development happens in one part of the country.
There can be advantages to targeting certain technologies if you want to make sure they're not all going to be concentrated in one area.
4:40 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Are there any smaller-scale wind projects that would be “paybackable”, without subsidies, in a reasonable time with reasonable rates of finance?
4:40 p.m.
Vice-President, Policy, Canadian Wind Energy Association
There are three categories. The small residential systems, you can't justify on a purely economic basis.
4:45 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
So those can't ever pay for themselves? They're more or less for people who want to be true green.
4:45 p.m.
Vice-President, Policy, Canadian Wind Energy Association
The paybacks on those are pretty long—20 years at least.
The second category, the mid-size farm systems, are different.
4:45 p.m.
Conservative
4:45 p.m.
Vice-President, Policy, Canadian Wind Energy Association
Yes, if you wanted to make the argument purely on return on investment, there are many cases where you get paybacks of ten years or less. The big problem you run into is that the upfront payment is huge. A 65-kilowatt system is $180,000. You don't pay any fuel costs down the road, but the upfront investment presents quite a barrier.
4:45 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Someone mentioned some non-financial barriers to entry. Can anyone give me a few aspects of non-financial things we could do to make it easier? Also, could someone talk more about artificial financial solutions, such as the connection? It sounds like it doesn't cost anywhere near $50,000 to do, and is sort of a made-up bill as an excuse. That was what seemed to be implied, unless I read it incorrectly.
4:45 p.m.
Ted Kantrowitz Vice-President, Canadian GeoExchange Coalition
I can talk about some of that.
I think GeoExchange is a great Canadian success story that's been undersold. It brings kudos to NRCan and some of the work of this committee, because it's been low cost.
One of the things we're facing right now is that it's very hard for us to reach municipalities. Denis was talking earlier about how it's easy for a municipality to outlaw something that's been permitted at either the federal or provincial level. So there's a lack of that type of coordination.
I think there's also a great opportunity for the federal government to work with other governments in providing a moral or financial example. Very often GeoExchange makes financial sense, and that's why our industry has been growing at over 100%. But we'd rather talk about integration with other technologies and how that makes sense for everyone on the demand side.
4:45 p.m.
Vice-President, Policy, Canadian Wind Energy Association
It is largely a provincial jurisdiction.
Also, it's a matter of getting used to it. If you connect a 65-kilowatt machine on your wind turbine in the system, that has about the same impact on the system as connecting an elevator motor. Let's say someone comes in and says they're used to dealing with elevator motors so it's no problem, and they know it's not going to cause a problem when it's turning on and off, but as for a wind system, well, they say they haven't seen that before so it may cause a problem, when in actual fact it doesn't.
Any utility that has ever integrated these things will tell you that it doesn't cause a problem, but it's a matter of getting used to it, and largely that rests with the provincial regulator.
4:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Trost.
Mr. Allen, you enjoyed your time, I'm sure.
I'll go now to the second round.
Five minutes, Mr. Tonks.
4:45 p.m.
Liberal
Alan Tonks Liberal York South—Weston, ON
I would almost like to give Mr. Allen some of my time, but I'm sure that wouldn't placate the other side. I don't want to cause him any problems.
Thank you very much. It's all been very helpful.
In particular, I'm sure the committee has been impressed with the transformation that takes place in terms of the commercialization of research into the development of new products, and then the associated skill set. When you talk about nearly 2,000 installers, the workshops with respect to residential and commercial designers, and all of that infrastructure, that's how it seems to me. I'm sure the committee has taken the story line with respect to industrial transformation, global competitiveness, and so on.
I was going to follow up on Mr. Tanguay's point with respect to Mr. Weis saying that pilot projects weren't required, but I wonder if I could sort of characterize, from an urban perspective, what I believe is the necessity for pilot projects with respect to integrated energy systems. I'm sure there are urban examples with respect to the use of biomass in urban parts in Quebec.
I'm not focusing on any single technology, but on the opportunity in terms of brownfield redevelopment across the country with respect to contributing to transit systems in terms of their self-sufficiency in taking them off the traditional energy grid, where they are localized and somewhat self-supportive, and integrating that into community development. The only example I can think of, Mr. Chair, that we have seen with respect to that scale has been the Dockside Green approach that's been taken in Victoria.
All of these small examples are extremely important. When you talk about farm and residential adaptations and the implications, all of that is extremely important. What could we do, as a committee, to put forward a menu of support systems that would encourage the kind of integrated urban application where you would have hundred-acre sites being transformed, sites that are part of large communities within cities, for example, in Toronto?
What is it that we could do, other than pilot projects, that would inspire the application across the country from all levels of government and from the development industry in regard to the capital formulation and the kinds of programs that have been suggested? As a committee, what could we do that would start to drive that kind of agenda?
4:50 p.m.
President and Chief Executive Officer, Canadian GeoExchange Coalition
I guess it's what you as a committee can do, but as a government as well. I'll give an example. Two or three years ago in Quebec, as part of the energy strategy, the Quebec government basically told the building managers in the public sector that whenever they were going to do a retrofit or build a new building, they would have to consider geo-exchange as one technology.
What I would say is that if we are to spend billions of dollars over the next five, ten, or twenty years in rebuilding the infrastructure or redeveloping brownfield areas in large communities, and smaller ones as well, maybe we should ask about or put some rules in place that would force municipalities to consider integrating technology to optimize the use of energy on their territory. That would certainly help in building better infrastructure.
One of the impacts of that is in regard to the payback period that we were talking about in the previous question. When you look at one technology on its own that has a ten-year payback and at another technology on its own that has a ten-year payback, maybe if you were to combine them, the payback would be down to seven or eight years. Maybe with another technology, it would go down to six years. I think there is something there to think about.
We should be trying to think about energy systems when we invest in infrastructure, rather than saying that you have to redevelop this when you're going to build a gas pipeline, for example. It's really a matter of looking at making the rules stricter, I would say, particularly in large urban areas where they can absorb those things.