Natural Resources Committee on April 22nd, 2010

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

We are here today to continue our study of the status of the ecoENERGY program. Today's session, of course, is on carbon capture and sequestration.

We have two panels today. On our first panel we have, from the Pembina Institute, Ed Whittingham, director of consulting services; from the Saskatchewan Power Corporation, we have Michael J. Monea, vice-president; and from the TransAlta Corporation, we have Don Wharton, vice-president of sustainable development.

I thank all of you gentlemen for being here today. We will have presentations first of up to 10 minutes, although we would prefer them to be shorter so we have more time for questioning.

We'll start with the Pembina Institute, Ed Whittingham. You can go ahead, sir, with your presentation.

[Ed Whittingham, Director, Consulting Services, Pembina Institute]

Thank you, Chair Benoit.

Good morning, members of the committee. My name is Ed Whittingham, and I'm very happy to have been invited to present to you today.

The Pembina Institute is a sustainable energy think tank originally based in Alberta. We have offices nationally now. Pembina has done a fair amount of work on CCS, as have I personally, including looking at CCS options for energy companies; doing technical stakeholder and policy analysis; convening dialogues, particularly between companies, environmental groups, and landowners on CCS; as well as hosting a thought leaders forum on CCS where we brought together from around the country some of the thought leaders on the technology and how it's best applied. Those are the rough qualifications that I bring to my appearance here today.

I'd like to speak a little about the Pembina Institute's perspective on CCS, a printed copy of which you should have before you. I'll refer to it, but will not read directly from it, and put CCS in the context as one of the technologies used for fighting climate change today.

On that point, I should say right off the top that the Pembina Institute sees CCS as one of a number of technologies used. It's very useful for reducing greenhouse gas emissions and therefore useful for combatting dangerous climate change. But having said that, we see it as one technology that's part of a portfolio approach.

When we think about the deployment of CCS as a GHG solution, we also would like to see a scale-up of renewable energy and energy efficiency. We also want to see a fair distribution of CCS on the expenditure side as well. Those are two conditions for our support that I'd like to state up front.

When you think of CCS and its applicability in Canada, you have to think about it in three ways. One is, do we have the storage capability? Two, can we capture the emissions? Three, do we have the technology necessary?

On the storage side, if you look at the IPCC in its reporting, we have globally 2,000 gigatonnes of storage capacity in geological formations. If the world emits 32 gigatonnes of CO₂ a year, that would give us 60 years of storage capacity. That's not to say we're going to capture every single emission within that, of course, but it's just illustrative to say that we have lots of places around the world, and in Canada, in the western sedimentary basin, to store emissions.

On the capture side, on the supply side, so to speak, it's best applied to large point sources. Do we have those point sources in Canada? Absolutely, we have over 100 facilities that produce a half megatonne of carbon a year. Where I'm from in Alberta we have 101 facilities that produce over 100,000 tonnes of CO₂ per year. So there's ample supply.

On the technology side, can we do it? We've been injecting various gases into the ground for over 30 years now, whether acid gas or CO₂, just as pure storage or for enhanced oil recovery.

On the safety side, maybe you'll read much about it in the media, but the institute feels that really safety is not an issue, provided we adequately select our reservoirs, we have competent operators, and we have good operating protocols that carbon capture and storage can be done in a way that protects both people and the atmosphere from leaks--although, of course, we have movements; you might have heard of NIMBY, and we have BANANA, Build Absolutely Nothing Anywhere Near Anyone. In one of those cases, I think CCS is a safe technology, and proven, and by any indication.... On my flight out here I sat next to Larry, a roughneck safety specialist, and he said when dealing with different gases, CO₂ is the least of our concerns and we can handle it. So the institute is not concerned there.

If you total this up, we see CCS playing potentially a significant role in reducing greenhouse emissions and combatting climate change. Our own economic modelling shows that under varying assumptions—including assuming that there is a CCS regulation and we have the right market forces harnessed, i.e. we have the right price signal for emitters—CCS could equal upwards of a 75-megatonne-per-year reduction by 2020. That's research that Pembina itself has commissioned.

I won't refer to the many studies out there that show the potential of CCS, perhaps save for one, because they're presenting afterward. The Integrated CO₂ Network shows that CCS again could play a substantial role in reducing greenhouse gas emissions; in its studies, upwards of 55 megatonnes by 2020.

At any rate, if we look at Canada's overall emissions--what we hope to do, whether it's a 17% decrease or a 20% decrease by 2020--carbon capture and storage has a significant role to play. That's the good news.

I wouldn't be a representative of an environmental group if I didn't have some bad news to share. The bad news is, very simply, it's bloody expensive, any way you look at it. And as we know from the federal contribution of upwards of a billion dollars, from Alberta's contribution of upwards of $2 billion to get initial projects going, in the early stages it's going to require a significant public investment.

But the good news within that bad news story is that we can think of public investment or public support of CCS more broadly as being phased. In the first phase we're doing what we're doing. We're jump-starting CCS projects so we get three to five commercial-scale projects going. The colleague to my left here is a representative of one of those projects, and we have two others in Alberta, one that's more at the R and D stage, and potentially in northeast B.C., with Spectra in Fort Nelson, another project coming online. So we're already heading into that early adoption phase.

In the second phase, when we have wider market penetration, we can imagine other emitters, other companies and regulators, learning from those initial phases, providing the right kind of incentive, which isn't limited to a subsidy, by the way—there are other economic instruments we can use—and then companies developing plans for CCS more broadly across different point sources.

Finally, in the wide market penetration phase, we can imagine CCS being a requirement of any facility in Canada that emits above a certain threshold of carbon per year and that CCS is widely deployed.

As you can imagine, as we move across those phases, the cost of the technology will come down. In fact, there's some international consensus around the notion that if we have 20 projects internationally by 2020, that might be what we need, the critical threshold, to really bring the cost down and allow us to commercialize CCS and deploy it broadly, in the way that we need to, to reduce our greenhouse gas emissions.

Lastly, how do we pay for it?

I've talked about the one form, just direct subsidy, which we've done and which the Pembina Institute feels is appropriate in the early adopter phase.

We also, of course, need the right price signal. I'm sure I don't need to lecture this committee on the various forms of carbon pricing and what those price signals could look like. Our own modelling says that if we're to meet the federal government's own greenhouse gas target by 2020, we need a carbon price of $40 by 2011, and that price needs to rise to $100 by 2020. The national round table and other bodies have conducted similar studies. The bottom line is, for CCS to be commercialized and deployed, we need an adequate price signal using some form of carbon pricing and following a phased approach. That we would consider to be the industry emitter coin.

On the public coin, as that price comes into effect and costs come down, there's certainly a role that we can use for different economic instruments, and as I say, not limited to straight subsidies. Consider accelerated capital cost allowance for the various components of CCS as a way of incenting it. Consider other economic instruments—I'm sure you have a laundry list—things like multiple credits for CCS, loan guarantees, low interest loans, perhaps an energy consumer levy for CSS, which is being used in the United Kingdom, and a voluntary purchase of CCS offsets, CCS bonds. There are a number of things that we can use to actually properly incent it.

Mr. Chair, members of the committee, those are my comments today. I look forward to taking your questions shortly. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation, Mr. Whittingham.

We go now to Michael Monea from the Saskatchewan Power Corporation.

Go ahead with your presentation, please, sir.

[Michael J. Monea, Vice-President, Saskatchewan Power Corporation]

Thank you, Mr. Chair.

I'd like to tell you a little bit about what Saskatchewan is doing, which has importance to SaskPower on CCS—carbon capture and storage.

On the storage side and the enhanced oil recovery side, Saskatchewan has the Weyburn project, which has now stored over 17 million tonnes of CO₂ in an oil reservoir, and in incremental oil, 20,000 barrels a day. So it's a huge project that the world is learning from.

We have another project in Saskatchewan called “aquastore”, which will be storing 600 to 700 tonnes a day from a refinery of CO₂ into deep saline reservoirs, which again is very important for SaskPower to monitor.

On the capture side, we have two projects, which I want to talk to you today about. One of them is the Boundary Dam 3 project, and the second is called a demonstration facility.

I'll deal with the Boundary Dam project first. We've been studying how to capture CO₂ from a coal plant for some years now. Originally, SaskPower looked at a type of capture system called “oxyfuel”, which we felt was too expensive. So we went, then, to post-combustion capture, which is what I'm working on right now at SaskPower. It will be potentially the first commercial plant to capture CO₂ from a retrofit coal plant, for lignite coal, which is a very low-grade coal. Again, the world is very interested in seeing if we can manage the economics to make this work.

That plant, if it goes ahead, will be capturing one million tonnes a year of CO₂. It is designed also to sell that CO₂ to the oil and gas industry. I'm quite happy to say that I have six to eight clients right now in the oil and gas industry that are interested in buying that CO₂. So one of the questions we're answering is, what will industry pay for CO₂? We think we're getting very close to that answer, which is part of our economic package.

Boundary Dam is one of six units that we have at the Boundary Dam facility. Boundary Dam 3 is a 139-megawatt plant that's ready to be shut in, in two years. So SaskPower has taken the initiative, in conjunction with our federal government, to see if we can turn that coal plant into a viable electrical source.

What we're finding, and what we will release, is that there is a lot of life left in these coal plants. What we're also finding is that there are some tremendous efficiencies that can help drive the economics down for capturing carbon. That will be released once the project information comes out.

We have two important timelines here. One is that I'm submitting a business case to our provincial government and the board of directors of SaskPower by August this year. If it gets the go-ahead, the plant will be built by the end of 2013. Right now, we've commissioned and ordered a turbine from Hitachi in Japan, which will be the world's first turbine made specifically for a CO₂ capture unit for a coal plant. That has put us very uniquely on the world stage, because we're at the procurement stage and it's the only plant that's ready at that level.

SaskPower is very committed to this project, and the reason it's committed is that we have to find out if coal is a viable option for our utility in the future. In fact, 55% of our energy comes from coal, and we just can't have those plants shut off. We have a lot of the mining industry that supports that mine, and we have a lot of people who work in those coal plants.

We're finding that we're pleasantly surprised by some of the economics we're being shown right now. You may have heard what the cost of capturing CO₂ may be. Well, the numbers we're seeing are quite a bit lower than what the world has been forecasting. So we're very excited that, once this project goes ahead, we'll be able to actually define some of the questions that people are trying to get their heads around, such as what does it cost to capture CO₂, and is there a life for coal?

We think we can clean our coal plants up to emissions in the range of 0.1 to 0.15 tonnes per megawatt hour, which is very clean. To give you an idea, right now, we're emitting 1.2 tonnes per megawatt hour. So getting it down to that level is very important to us, which is approximately 90% capture of CO₂.

The technology we'll use at Boundary Dam 3, when it goes ahead, will be Cansolv. Cansolv Technologies was originally a Quebec-based company that is now owned by Shell Global. The construction company will be SNC-Lavalin. So they're both very anxious to make this project go ahead.

I'll just move on to the next plant or facility. It's in the conceptual stage right now. It's called a demonstration facility. Where this idea came up, from the provincial government, was that we saw a need to do pre-commercial testing for these capture units. There is no place in the world right now that can bring different technologies in and test at a pre-commercial stage.

For example, in one of the technologies I'm looking at right now, they're basing a lot of their engineering on a 12-inch column. Well, the absorber is 22 metres in diameter, so you have to have a much larger test bed, and that's what we are working on.

What we've done is we've gone out to industry and we've said, “What would encourage you to come to SaskPower in Saskatchewan to build your own unit to do a test, so that you could pre-commercial test your technology faster?” What they said was, “We would like to be part of three test beds that we could come in and build our unit, do our testing, but show the world that we could actually do the construction.” We have, right now, Hitachi, Toshiba, Siemens, BMW, and Sojitz—other companies that are interested in testing on this concept or facility.

Where it's hung up right now is funding. We have a commitment from our provincial government. We have a commitment from industry to come in with SaskPower to build the facility. We have a $92 million request in to the federal government in order to make this a partnership between the federal-provincial government and SaskPower plus industry, and we're seeing no movement basically from the federal government to participate in this project.

I will say that if that project does not go ahead, it may actually affect Boundary Dam proceeding, because we need to have a technology platform in order to test into the future.

So we have both projects wrapped up together.

A very important date is August of this year for my first business case. The second one is, of course, for the demonstration facility. If we don't get some word that there's federal participation soon, we'll lose a window to have this facility up and running by the end of 2012, and we will have lost our international membership to participate.

Thank you very much, Mr. Chairman.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Monea.

We go to our final witness for this hour, from TransAlta Corporation, Don Wharton, vice-president.

Go ahead, please, sir.

[Don Wharton, Vice-President, Sustainable Development, TransAlta Corporation]

Thank you, Mr. Chairman.

Members of Parliament, fellow panellists, other guests, good morning.

Thank you for the opportunity to speak to you about TransAlta's efforts to develop carbon capture and storage in Canada, and how those efforts will be achieved, in large part, through the Government of Canada's ecoENERGY program.

My name is Don Wharton. I'm the vice-president for sustainable development at TransAlta.

I'll just say a word about our company. We have approximately 85 power plants, just under 10,000 megawatts of generation. That makes us roughly the same size as BC Hydro. We are Canada's largest investor-owned utility, and we have a broad portfolio of generation fuels, including coal, natural gas, small and large hydro, biomass, and wind. It may surprise you to know that TransAlta is Canada's largest investor-owned wind developer and that more than 22% of our power generation comes from renewable sources.

Today, our business strategy is focused on clean energy in two primary areas: renewables, such as wind, hydro, and biomass technologies; and clean energy technologies, particularly carbon capture and storage. With regard to CCS, our primary efforts are focused on an initiative referred to as Project Pioneer, a beneficiary of the government's ecoENERGY program. We're pleased to have Canada as a partner in this project. I'd like to describe briefly that project.

By 2015, Project Pioneer will be one of the largest fully integrated CCS systems in the world. It will be built as a retrofit to our Keephills 3 coal-fired power plant and will use chilled ammonia technology to capture and permanently store one million tonnes of greenhouse gases per year, or about a third of that plant's emissions. This will make Keephills 3 one of the cleanest coal-fired power plants in the world.

Together with the Governments of Canada and Alberta, we have formed a consortium of partners to finance, design, build, and operate this project. TransAlta's partners include Alstom, Capital Power, and a pipeline company, who together bring expertise in all elements of the project. Based on detailed engineering work this year, we expect to begin construction in 2011. Pioneer will be operational by 2015 and will run for a 10-year test period from 2015 to 2025. It may run longer. The captured CO₂ will be transported to both a sequestration site at a nearby saline aquifer and an enhanced oil recovery project in a mature oil field about 50 kilometres away. It's important that we develop each of these storage options since both will be required to handle long-term CO₂ supply from CCS projects.

Additionally, TransAlta is developing a highly aggressive knowledge transfer program to convey the knowledge we gain from Project Pioneer. As recipients of significant public funding, we have an obligation to maximize the knowledge value from this prototype project. We are developing plans with academia, institutions, industry associations, such as the ICO₂N group, which you'll hear from later this morning, and other CCS projects across the globe to leverage the learning from this effort. In turn, we expect to learn more from them.

I'd like to turn now to our perceptions of the benefits of CCS. The benefits from Project Pioneer are both environmental and economic. On the environmental front, Pioneer will remove about one million tonnes of CO₂ annually from the environment, the equivalent of taking approximately 160,000 cars off the road each year in Canada. In addition, the project will also reduce SO₂ and particulate emissions from that project.

On a broader scale, Canada's greenhouse gas emissions from coal-fired generation are about 90 million tonnes a year. Globally, coal-fired generation represents the world's single largest industrial source of carbon emissions. It is TransAlta's view that CCS is one of the very few options we have to make large reductions in these emissions within a relatively short timeframe.

There are also important socio-economic benefits that have received little attention, particularly in areas where enhanced oil recovery is possible. In assessing Project Pioneer, TransAlta conducted an independent analysis through Wright Mansell Research, which concluded that over the 10-year life of the project, Pioneer would extract at least 22 million barrels of incremental oil production through enhanced oil recovery; increase federal, provincial, and local government revenues by as much $1.2 billion from taxes and royalties; and increase Alberta's GDP by between $2 billion and $3 billion over a 14-year period. This analysis would indicate that the return on investment in Project Pioneer and the federal ecoENERGY program and other government funds is quite worthwhile.

Let me speak a minute about the ecoENERGY program. It has been instrumental in making this project a reality. In total, Pioneer will receive $773 million in government funding. The Canadian government is contributing $342 million to Pioneer and the Alberta government $431 million. The remaining portion will come from industry and market sources. There's no question in my mind that without this funding, Pioneer would not proceed—at least at the pace required to meet global greenhouse gas reduction objectives.

We are in the early stages and there has been a lot said about the economic viability of CCS. This issue is the single biggest challenge facing CCS today. But I must say that most of the debate about costs has been speculative, based on hypothetical numbers and little experience. I would put industry, as well as others, in that same boat.

We need to prove the costs out, good or bad, and push hard to drive down capital and operating costs through optimization, scale, and technological improvements. Only then will we really be able to tell whether CCS has a long-term future as a major tool in the fight against climate change.

In addition, the Canadian regulatory framework has not yet put a price on carbon, which will provide the ultimate benchmark for new clean technologies. If CCS, once mature, can remove large volumes of greenhouse gases at or near the price of alternative solutions, it will become a tremendous asset.

However, as with many new technologies, there's a financial gap that needs to be bridged to encourage the private sector to invest time and resources to make CCS a viable clean technology in the long haul, before there is clarity on carbon prices and technical reliability.

Thankfully, through its ecoENERGY funding for CCS projects, the Government of Canada has gone a long way to bridging this gap.

Let me speak for a moment about the need for Canadian leadership in this area.

Last month I was fortunate to represent TransAlta in a joint Canada-Alberta CCS trade mission to Europe. We met with companies and governments in Norway, the U.K, and Germany, and also in Brussels, all of whom were engaged in CCS in some fashion. While these countries have been the early leaders in developing CCS, every country that we visited said that Canada was seen as being positioned to become a world leader, if not the world leader, in this area. Why? Because we enjoy the fortunate coincidence of supportive government programs and policies, solid industrial infrastructure and expertise, great geology, and good public support.

As I conclude my remarks, let me leave with you with a few key points.

First, coal will remain part of the global energy mix for the 21st century. Coal provides more than 40% of the world's electricity and will be maintained as a viable part of the global fuel mix. It's cheap, plentiful, and is deeply embedded in the global economy. Half of the electricity in the United States comes from coal. It's not going away anytime soon.

Second, technology is the key. TransAlta believes that CCS is one of the few technologies that can deliver major greenhouse gas reductions globally in the next 10 to 15 years. More than 90% of today's emissions from coal-fired power generation can be captured by CCS.

Third, governments need to bridge the financial gap. This is not a lasting financial commitment, but an initial investment to catapult CCS technology to the point where it's a viable and a competitive solution to preserving the value of Canada's energy resources. Nothing will reduce Canada's environmental footprint or give us greater economic benefit and national security than clean coal.

Finally, there is a leadership opportunity. This can be Canada's significant contribution to the world's climate challenge in the next decade. With five major projects currently in development in Canada, our country is ahead of everyone else in achieving the G8 target of having 20 CCS projects in place around the world by 2015.

CCS is essential if Canada and the world are to address the carbon challenge, and Canadian governments have been instrumental in funding and supporting this solution.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Wharton.

We now go directly to questions and comments. We will start with the official opposition and Mr. Regan, for up to seven minutes.

Go ahead, please.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman, and thank you to the witnesses for coming today.

Mr. Whittingham, let me start with you. The government appears to have invested a heck of a lot in carbon capture and storage. We've actually seen them recently kill the ecoENERGY retrofit homes program. As you note in your comments in your paper here, they've substantially underfunded energy efficiency and low-impact renewable energy production.

I'd like your comment on that and on the question of what your view is of CCS when it's used to produce more petroleum; in other words, for EOR. Will that help us in relation to greenhouse gases?

[Ed Whittingham]

Thank you for the question.

To your first question, looking at the role of energy efficiency and renewable energy investments, the answer is absolutely. Our belief is that in order to reduce our greenhouse gas emissions we need a portfolio approach. Of course, a group like the Pembina Institute is going to advocate for, let's say, higher expenditures in fighting climate change than we may actually receive. But we don't want investments in CCS necessarily to be at the cost of investments in renewables and energy efficiency. We think that through a variety of economic instruments and an adequate carbon price we can actually achieve all three at the same time. I want to make that point clear.

As for the carbon being used for enhanced oil recovery, it really begs a good life-cycle analysis to see what happens. If the carbon does come, do we have a net savings? The answer is in many cases yes. Certainly in the early stages, in order for CCS to be viable they need that revenue tranche. All three of us have spoken about the financial gap. When you're able to bring in a revenue source such as EOR, it helps decrease the gap. In some cases they'd use water flooding and bring that oil up regardless, so why don't we use CO₂ and save our water?

However, as I say, some studies have come out recently that indicate that the life-cycle benefits need to be better understood, and we would support that kind of analysis.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

The 2010 budget talks about investing $1 billion in green energy over five years, including $65 million in this year, 2010-11. We're told that $850 million will be spent in support of CCS, including $120 million for the Shell Quest administration project, $318 million for TransAlta's Keephills project, and $30 million for the Alberta carbon trunk line project. Mr. Wharton said there were five, so there are two more that I haven't mentioned.

Mr. Wharton, could you tell me what the other two are that I've missed?

[Don Wharton]

Yes. I think my colleague from Pembina mentioned a project in B.C. by Spectra Energy, and I think you missed Saskatchewan Power and Swan Hills Synfuels. That would be a list of five: Swan Hills, Enhance, TransAlta, Shell, and SaskPower.

[Geoff Regan, Liberal, Halifax West, NS]

I'll turn to Mr. Monea now.

We've heard that government is looking at putting a price on carbon, although there's no sign of them acting at this point. But they're talking about it and looking at it. At the moment a lot of these projects are being paid for by the government—two levels of government—taxing Canadians, regardless of whether today, on Earth Day, they came to work by bicycle or in their Hummer. This is an interesting issue.

You talk about the question of what the cost of CCS is likely to be at the moment. We're now talking, it seems, mostly in the range of $150 to $200, and you, Mr. Whittingham, are saying you think it will come down and there will be a dissecting point whereby the price of carbon has to be about $50 for this to work.

Mr. Monea, do you think $50 is a realistic figure in that regard? And if that is true, what's the impact on the average homeowner in terms of electricity costs per year?

[Michael J. Monea]

First of all, Saskatchewan is getting no money from the eco-fund. We're not part of the other group.

[Geoff Regan, Liberal, Halifax West, NS]

So you get none from government—none from the provincial government either?

[Michael J. Monea]

We have $240 million from a previous fund that was given to Saskatchewan two to three years ago.

[Geoff Regan, Liberal, Halifax West, NS]

That is from the feds.

[Michael J. Monea]

That's from the federal government; that's right.

We are applying right now for this demonstration facility or supplementary moneys for the Boundary Dam, but mainly we are trying to get money for the demonstration project to go ahead.

To answer your question, the way you base the price of carbon from us as a power company is that you have an oil company that may want to buy the CO₂. The price may be anywhere from $20 to $50 or $60 a tonne, depending how far you have to pipeline, etc. The second thing, which we are guessing at and which we need a lot of help on from the federal government, is what there could be by way of a credit or whatever for the CO₂ into the future. SaskPower is guessing, but we're using between $15 and $25 a tonne. You add those two together and that's what builds your price.

But I will make it simpler. Boundary Dam 3 will not go ahead, in my books, if our cost of electricity is going to be more than, say, that of natural gas generation. If it is more expensive than that, we're not building it. That is a pretty good statement.

[Geoff Regan, Liberal, Halifax West, NS]

In other words, unless there is a price on the GHG production by natural gas, you're not viable.

[Michael J. Monea]

That's right. And if somebody doesn't buy that CO₂.... We're making the assumption that even our neighbours in Alberta are...they have $15 in a technology fund. Even if we use that number we can make our economics work. But you have to have a price for carbon, or else it's too expensive.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much.

Mr. Whittingham, what are your thoughts on CCS as a response to the challenge of the oil sands?

[Ed Whittingham]

In our own modelling work we've shown that it would be applied in the oil sands. We have technical challenges around the purity of CO₂ streams; we don't think those challenges are insurmountable. And a tremendous amount of research and development is happening right now so that eventually CCS can be applied to the oil sands.

The Pembina Institute would support—and we have already, with Turning the Corner and its update in 2008—the CCS performance standard. Rather than a performance standard, our institute would support an outright regulation, seeing CCS as a mandated approach to new-build oil sands developments, or in fact new-build coal-fired electricity as well.

The bottom line is that we're not quite there yet to make it economic, but with a full-court press I think we can figure it out, and we should figure it out.

[The Chair, Conservative, Leon Benoit]

Thank you, and thank you Mr. Regan.

We go now to the Bloc Québécois, to Madame Brunelle for up to seven minutes.

Go ahead.

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

Good morning, gentlemen. It is my pleasure to welcome you. First, I will speak to Mr. Whittingham.

In your report, you state that Pembina views CO₂ capture and storage as one of a number of technologies and considers it to be one of many possible solutions. In addition, the government, in its latest budget, set aside $1 billion for clean energy technologies, with $800 million earmarked for funding CO₂ capture and storage projects.

Do you feel that we are putting all our eggs into one basket?

[Ed Whittingham]

Thank you for the question.

It certainly is right now; there is a large amount going toward CCS. In clean energy I would argue that we need more than a billion dollars so that we can continue comparable investments in CCS during these early stages when these investments are needed, before the cost of doing CCS comes down, so that at the same time we have the right price signal through some sort of carbon pricing.

I will reemphasize that point: that very shortly we need carbon pricing to provide the right incentive. At the same time, were it up to me I would double the amount we've invested in clean energy and have comparable amounts go to investments in renewables and efficiency as well. That includes renewing the ecoENERGY program for renewable energy. If we lose that program, I think it will be a critical loss for Canada.

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

You are talking about carbon pricing, but how can we set a price for carbon when the government is refusing to establish absolute reduction targets?

How could a system like that function?

Do you not think that the “polluter-pays” principle should apply and that, ultimately, people living in Quebec and the rest of Canada would end up paying for Alberta?

Finally, with an unproven solution like the CCS, we are simply applying adhesive tape to an open wound.