Natural Resources Committee on April 27th, 2010

[Dr. Phil Whiting]

In solar hot water, the market in North America is still very small. The market in Europe today is about $4 billion a year. North America's market is $100 million, so it's 40 times difference in scale with a similar kind of population base. The market in North America is now beginning to grow at about 50% to 70% a year. It's growing, not surprisingly, in those areas with the highest cost of conventional energy—areas with the best sunshine, of course—and also in areas where government regulations, whether they be incentives or other non-barriers that can be created, incentivize the growth of the industry.

[The Vice-Chair, Liberal, Alan Tonks]

We're out of time now. Thank you.

We'll go to Mr. Cullen.

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

Thank you, Chair.

Thank you to the witnesses.

I have a quick question. I think it was asked earlier about the total amount of money that Canada has invested in all the various energy streams over the last decade. At the very beginning of these committee hearings, I asked that of government officials. They committed to provide the committee with those numbers, through you, Chair, to the parliamentary secretary. I'm wondering if we could get an update as to when the government is going to come forward with the numbers. They committed they could do it. They said they would. We haven't seen them yet, and it's been a number of weeks.

[The Vice-Chair, Liberal, Alan Tonks]

Can we just leave that and go to our questions? We can then reflect on that.

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

I'm trying to understand this. We've got a strong public case for these technologies, for alternative energy. There's a strong economic case. Various streams mean different things, but the economics, the return on investment, we've been talking about consistently this morning, and with other technologies as well. There's an obvious environmental case to be made, as well as competitiveness with our major trading partners.

Can anyone on the panel explain why, with those four key elements of public interest, the government is refusing to support these technologies? I'm trying to find a reason. If it makes economic sense, if it makes environmental sense, if it makes the country more competitive and more energy secure, and if it creates jobs that we need in manufacturing, I can't find a stream of logic within the government's decision to say this is exactly the kind of industry they will not fund, and they will fund other things of much more suspicious intent.

[Dr. Phil Whiting]

I'm not going to try to second-guess the government's decision.

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

I might be looking for a first guess.

[Dr. Phil Whiting]

Yes, so I'll give you a first guess, and understand that I'm saying this as an eternal optimist.

My eternal optimist says that the Government of Canada will hopefully understand that there are places where investment in renewable energy makes sense and that what we're going to do is take a very broad program, the previous program—a lot of that investment was really spent on doors and windows and furnaces for people's homes under the ecoENERGY heat program—and take the money to focus it on renewable energy generation, which is the long-term investment that Canada needs to make.

If the objective is to refocus that investment, then I'm all for it. I just hope it happens really fast, because right now, as a result of that gap in the middle, I'm already seeing my business being hurt today.

That's my first guess.

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

Thank you.

Monsieur Guilbeault?

[Steven Guilbeault]

Thank you, Mr. Cullen.

In fact, I often ask myself that question, and the only answer I come up with is that it's ideology. For one thing, they don't believe that climate change is really a problem. So why worry? They don't believe in these technologies, and I'm talking about a belief in the virtually religious sense of the word, when the whole world around us is doing it. They believe in one form of technology or industrial energy development only: the 19th century one based on fossil fuel. That is the only thing they seem to understand and to all appearances the only thing, budget after budget, that the government is prepared to support.

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

Mr. Weis, return on investment has been calculated in different ways, but just about every renewable technology witness we've heard from can present some case for the dollars going in from the public and for what the public will get back, either directly to the consumer or through government revenues.

What case can be made for the $850 million going into carbon capture in terms of return on investment to the public or to individual consumers?

[Timothy Weis]

Carbon capture and storage really isn't my area, but Pembina takes a bit of a different tack concerning investment in carbon capture and storage. I think we agree that the government probably isn't the best place for that money to be coming from. We feel it should be coming more from the industry itself to clean up their own pollution.

At the same time, looking at the numbers, if we want to get to where we need to go, the challenge is going to be a difficult one without some type of carbon capture and storage. The question of where the investment comes from is a legitimate one, but whether it's from Canada or is globally sourced, particularly in China, is a difficult case to make without some sort of carbon capture and storage.

[The Vice-Chair, Liberal, Alan Tonks]

Just for the information of the committee, it's a 30-minute bell that is ringing, so I'm suggesting that we finish our line of questioning on all sides, and then we can adjourn.

Mr. Cullen, I'm sorry to interrupt.

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

I think someone was about to jump in—Mr. Whiting.

[Dr. Phil Whiting]

The $850 million for carbon capture doesn't mean a lot to me on its own, as a stand-alone number; it's rather in the context of the total investment portfolio. If it's $850 million being spend on carbon capture out of $900 million, I'd say that's a wrong priority. If it's $850 million being spent on the long-term development of an important technology out of $100 billion, I would say that 1% of our investment in renewable energy on carbon capture might make sense.

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

So it's the proportionality and the choice made.

[Dr. Phil Whiting]

That's my guess, yes.

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

The example of Spain was used earlier, that it was a country that for many years had lagged behind in competitiveness and on the energy security question. What changed for Spain? I'm assuming there was some sort of political mandate offered up, for them to suddenly ramp up and start to invest in things and then become a proud world leader on this stage.

Ms. McDonald could answer, then Mr. Weis.

[Elizabeth McDonald]

What happened in Spain was that there was both an economic need and an environmental need, so they adopted a national feed-in tariff program. There are some weaknesses to Spain; actually, Germany is the better example. It might be better in wind, but in solar, at least, they come and go on their incentives. They have stop-go programs, and we can give you little examples of the problem of stop-go programs.

One of the problems with a stop-go program is that almost all the Spanish investors in solar were at the Canadian Solar Industries Association's annual conference in December, so that's how moveable the investment is. But it was a recognition of the combined environmental requirements—three, actually—in Europe: environmental security, environmental concerns for sustainability, and thirdly, economics, because their economy is hurting now and has been hurting for a long time. It was on that basis that they created the program. It had three policy prongs that were critical to the Government of Spain at the time.

I'm not sure I'd use their total program design, though, although it has benefited the Canadian industry.

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

Does it not by intention or unintentionally sabotage the renewable energy system by not placing a price on carbon? If it's just a question out there constantly.... You used this as one of the factors, that Europe was contained within a known price for the pollution. It's Canada that just keeps ragging the puck. Does it not simply delay and stall the industry from being created if that price point is just removed? Now you're dependent on every single budget: is there an incentive in the budget or is there not; is it going to CCS or is it not?

Without that regime of a price, either by intention or not, the fact of the matter is that it stalls and suffocates a renewable industry that has to rely on public subsidies for its basic existence.

[The Vice-Chair, Liberal, Alan Tonks]

This will have to be the final response, Mr. Cullen.

[Timothy Weis]

I can make it quick. I think it also ultimately hurts the oil and gas industry as well. We've had all sorts of discussion with gas and oil developers in Alberta, where I've lived for the past decade. They're saying the same thing, that we need some sort of certainty to start planning around; we know this is coming, but maybe this year, maybe next year, or the year after. This really makes it difficult, because whether it's oil and gas or renewables or what have you, energy infrastructure is a 20-, 30-, or 40-year investment. Not knowing this year or not knowing next year makes it difficult for everybody, at the end of the day. That's what it comes down to.

[The Vice-Chair, Liberal, Alan Tonks]

We'll bring this to a close, Mr. Cullen.

Thank you, Mr. Weis.

We'll go to Mr. Anderson.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair, and thank you to the witnesses for being here today.

I have a comment before my questions. Mr. Cullen insists at pretty much every meeting on talking about the importance of carbon pricing, but he never mentions the impact of it on consumers. I think our prior testimony, including that last week, when we heard that there was basically no agreement on whether the price should be somewhere from $40 to $200, reflects the fact that if it's put in place it has to change consumer prices. That's pretty much the point of it, to drive the price of conventional supply of energy up to the point where other sources are now going to be competitive with what we have conventionally.

I think we need to keep that in mind as we're having the discussion as well.

I would like to talk to the solar folks.

Where do you see the future of solar in the next ten years? You're talking about the different types of solar developments that have taken place with thermal, hydro, and the photovoltaic systems of the past, which have been the focus of attention on solar. Where are we going to be in ten years in terms of technology, and where are we going to be in terms of the size of projects?

I think in the past the public would typically think the solar is geared more toward individual applications. Mr. Shory earlier asked whether the wind folks were gearing towards individual applications as well. But where is your future?

[Dr. Phil Whiting]

I think part of the beauty of solar is that it's a technology that lends itself to both small-scale and large-scale applications. You'll still see lots of residential applications of solar projects, as you do in Europe. If you want to look towards our future in the ten-year timeframe, I think that looking at Europe today would be a pretty good model for it.

You'll see lots of systems with one or two panels on peoples' homes, and then you'll see large community developments. There are projects in Europe now with 30,000 or 40,000 or 50,000 panels in community dwellings from which they're providing heat to homes from the shared energy of all these systems.

You'll also see large commercial projects. We've done some very large commercial projects in the last few years—mostly in the United States, actually, but you're going to see these in Canada as well.