Natural Resources Committee on March 5th, 2009

[Geoff Regan, Liberal, Halifax West, NS]

I'll address you a very short question. I'll ask you what you think the top two or three challenges are to community-based energy systems and what the Government of Canada ought to be doing. What are the top two or three things you're dealing with?

I don't have time to ask many of you, but I'll start and go across. We'll see when the time runs out.

[Joanne McKenna]

I think, again, it's integration, working collaboratively with the levels of government. There's a keen interest there, so I think we need to harness the desire and willingness to work to get an integrated urban system. But we're going to need to work together to integrate it, so getting out of the silo mentalities and starting to talk about it is one challenge.

There's a lack of funds. As some of my colleagues have said, the funds tend to be sometimes specific to a technology. This is a bit more of a comprehensive approach, which could employ many technologies or many different energy efficiency systems; it's not a matter of picking a single one all of the time. I think that's another issue.

Another one is, again, that it has to come back to education. I think people get nervous when you say biomass or biogas and think “emissions” and “dirty”. It's not dirty; it's actually incredibly efficient. To capture gas at a landfill is probably one of the most efficient things you could do, but that's not really understood. I think we could take a role in getting that message out.

[The Vice-Chair, Liberal, Alan Tonks]

I think that's as far down as we'll get, but I'm sure Madame Brunelle will have questions by means of which others can pick up on their theme.

Madame Brunelle.

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

Good afternoon.

I would like to make one comment and ask you all one question.

QUEST advocates integration as a way to face the challenge of energy supply. However, there appear to be a number of differences between the provinces on the distribution of the costs of various forms of energy and also on the effects on the environment.

For example, for us in Quebec, most of the energy we use comes from hydroelectricity. It seems to me that, with the QUEST program, the federal government is moving into provincial jurisdiction. I would like to read you a section from Quebec's Act Respecting the Ministère du Conseil Exécutif:

3.11. Except to the extent expressly provided for by law, no municipal body or school body may, without the prior authorization of the Government, enter into any agreement with another government in Canada or one of its departments or government agencies, or with a federal public agency.

You can see my question coming. How can the federal government run the QUEST program? As Mr. Ydreos said himself, it needs the cooperation of the three levels of government. That is clearly encroaching into provincial areas of jurisdiction, something that is prohibited, in Quebec law, at least.

How do you see the role of the federal government as applied to the QUEST program?

[Joanne McKenna]

I'd like to flip the order.

[Voices]

Oh, oh!

[The Vice-Chair, Liberal, Alan Tonks]

Ms. McKenna, you can redirect if you like.

[Joanne McKenna]

Wow, that's wading into quite a debate.

My point is that it's not the feds directing what provincial or municipal governments should do; rather, it's talking about what initiatives provincial or local governments want to work on and focus on. Then you channel or leverage those moneys.

I'll give you an example from Hydro. We're a crown corporation. We give moneys to a lot of different communities for things. This may sound like, again, a simple solution, but there are so many different departments. Let's say we got together and worked with the City of Quesnel. We could maybe do X, Y, and Z if we pooled our dollars and actually got a project up and running, as opposed to doing a feasibility study there, an energy audit there, something there, something here. I think you can look for a bigger bang.

That may not have answered your question, and I apologize if it didn't, but those are my thoughts on that.

[The Vice-Chair, Liberal, Alan Tonks]

Mr. Ydreos, do you wish to reply to that?

[Mel Ydreos]

I think the federal government has a key role in laying out a vision for the country. That vision is important. You can look to other jurisdictions around the world--Sweden, Germany, Japan--who have actually laid out visions about how the country should look in the future from the perspective of energy consumption.

I think it's important that the vision come, at least notionally, from the federal government. That in itself then directs and sends a message and a signal to other levels of government, whether it be provincial or municipal, about what we're really trying to accomplish as a country.

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

I have no problem with the federal government having a vision, but it seems to me that it should be sending money to the provinces who would then go about setting up their own systems and priorities. We know that that is very different, and seems to me that there would be better tie-in that way.

On another matter, Mr. Stout, is natural gas a pollutant?

[Douglas Stout]

Natural gas is a carbon fuel, so yes, there are greenhouse gases, or GHGs, associated with it. It is the cleanest carbon fuel, used across the world as a baseline or a foundation for these systems.

More broadly, as we develop these types of systems, we see the natural gas business as an evolution. From where we are today, with it being 100% of the energy that flows through our pipes, as these systems are built up, there will be an integrated system down the road. It's a much smaller component by 2050, let's say, and we do have all these different pieces here.

So we view that as a vision of where we see our role and the future of natural gas going across the board, as the lowest carbon fuel, but definitely we're going to see less use of that and slightly different applications as it integrates with all these different technologies that are available today.

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

In your presentation, you suggested new energy options. I find that interesting.

Do you devote a portion of your company's budget to developing other forms of energy? Do you do research and development yourselves, without federal or provincial funding?

[Douglas Stout]

We don't do research and development on our own. I'd call it more applied research. We look around for what kinds of technologies are available in, say, Europe, the U.S., and Asia and can be brought to bear and put together as a system overall. But we do that with our own funding. The projects I outlined here are done with basically 100% funding from the utility to build these systems. Obviously we then charge the customers for the energy that's delivered to them.

Where there may be funds from, say, the gas utility for energy efficiency programs that are available, or from B.C. Hydro, or from provincial or federal governments, those would be integrated with the investment capital. That's where we say there's not a need, necessarily, for explicit funding for these. There's assistance for them and a way to help them along.

To get back to the earlier question on where the federal government could go, besides the encouragement and the vision, probably it's just looking around at the provincial and municipal levels--I think Ms. McKenna has this in her presentation—to see where the federal government has buildings or facilities associated, ensuring that those are available to connect to an energy system. Just from a practical sense, that would help further the cause and make things move along.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Madame Brunelle.

We'll go on to Mr. Cullen, please.

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

Thank you, Mr. Chair.

Thank you to our witnesses.

I suppose a lot of committee members are going to be interested in how to move these communities from the exception to the rule. We can point out various communities across the country that have done well in integrating their energy, but they still remain in the vast minority. The questions here, Mr. Regan's and others', have been trying to find out where the policy switches can happen so that this becomes the norm. The exceptions become the communities that are not integrating their power.

You folks talked about the application of a green lens across policies. I suppose the intention of government, when stated, that we're looking to reduce greenhouse gases, seems to be doing things to both encourage it and discourage it at the same time.

Mr. Stout talks about natural gas being the lowest-emitting greenhouse gas, but we have government policy that encourages it to be used to transfer bitumen out of the oil sands. That energy is then producing the world's highest intensity of greenhouse gas energy. It's a confusing policy for a lot of Canadians to grasp in terms of where government truly wants to head and whether we imagine a low-carbon future.

In terms of a green lens, I'm wondering about the application of a policy prescription that looks at the best bang for our buck in terms of government investment and government policy direction. And by “best bang for our buck”, I mean specifically, certainly in these economic times, job creation. But second, where do we most effectively apply government spending to reduce greenhouse gases?

This is a specific question for our friends from B.C. Hydro. I'm a B.C. resident, and I've seen the jerking forward of B.C. Hydro in accomplishing this greener future. Would such a green lens application to government policy and spending be appropriate? Over the top of every decision, they would have to filter through this notion of where we most effectively are reducing greenhouse gases and most effectively creating green jobs.

[Joanne McKenna]

I think the question is a complicated one. Ideally, I guess you could say, it would be great if you put a green lens on everything. I guess for me it comes back to this notion of net environmental benefit. At some point you need to weigh energy efficiencies and district heating and other trade-offs against green.

One of the challenges with green--I'm a huge advocate of green and renewable energy, because that's what I do at Hydro--is the reality that we can't have 100% renewable and have a firm energy system. That is just a fact. Unless you have a lot of energy storage capabilities, you're going to have that risk.

With regard to getting more communities on board, I think one of the hurdles is financial. They do not have the money right now, particularly in this climate, to focus that capital investment. If we could come up with policies that supported creative partnerships, I think you would see more of that.

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

The government has been subsidizing the generation of wind power for a number of years now.

[Joanne McKenna]

You mean federally?

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

Yes. How critical was that to, say, B.C. Hydro's case?

[Joanne McKenna]

Significant.

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

So the cutting of the incentive to wind power, I would imagine, is significant in the reverse.

[Joanne McKenna]

Yes. I think the challenge is that we're seeing prices escalate. Wind energy in B.C. is costly, largely because of the terrain and where the population is located. Again, those are just the facts.

For a wind project to be economic, it has to be big. It has to have great wind and it has to have an incentive. Hydro incents from a green perspective as well. We will buy the green credits, or the green environmental attributes, from a project and assign a cost to that. The IPP or the developer needs that to go to the bank, along with that incentive, to get the funding.

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

Without that incentive, the likelihood of wind getting off the ground, in the case of B.C.--but I imagine it's similar for other provinces--

[Joanne McKenna]

For everyone, yes, I think it would be more challenging.