Natural Resources Committee on April 27th, 2010

[Sean Whittaker]

G Financial Services did a study. I'll send it to you.

[The Vice-Chair, Liberal, Alan Tonks]

Mr. Harris, you're approaching that five minutes now.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Okay.

Here is just one quick question now. The cost of wind energy in Ontario currently is about 13.5¢, I see, and nuclear is about 5.5¢, and hydro is about 3.7¢, the latter being, I think we could call it, clean energy. That's quite a difference; it's about an 8¢ difference over nuclear and 10¢ over hydro. How would an investor see that as an ideal situation to put money into when there's such a spread? Is some magical thing going to happen that we don't know about that's going to bring it all together? Is it the carbon exchange? Is that what we're waiting for, to make wind power...?

[Sean Whittaker]

Well, not exactly. I'll say a couple things.

First, in the case of Ontario, ecoENERGY always had a clawback provision. So if the price that was paid for wind exceeded a certain amount, you were no longer eligible to receive ecoENERGY.

In the case of Ontario, with the price they've established for the feed-in tariff, all those projects would not be eligible to receive one penny from ecoENERGY.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Okay. I want to turn my time over to Mr. Shory, but perhaps we'll pick it up later on another round.

[The Vice-Chair, Liberal, Alan Tonks]

One minute to Mr. Shory.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair, and thank you, Mr. Harris.

I have a quick question on wind energy. I understand that this is a mature technology and that the Government of Canada has committed more than $314 million on wind energy. Also, under National Resources Canada's clean energy fund, we have picked up two projects.

It seems that the focus has been on large wind turbines. I'd like you to comment, Mr. Whittaker, on whether there is any research on the development of small wind turbines focused on small communities and individual houses.

[Sean Whittaker]

That's an excellent question. Certainly we have a lot of activity in terms of small wind.

People look at large wind turbines, and that's one thing. Basically there are two categories of small wind turbines: residential systems, small ones; and medium-sized systems, which are for farms and commercial applications. A little-known fact about the medium-sized systems is that Canada has half of all the world's manufacturers already. In fact, one of them is in Halifax. Anything we do to stimulate them will, we believe, turn them into the best of the world in terms of small wind.

So there is a huge opportunity just in terms of manufacturing and in terms of individuals interested in having turbines on their properties. Unfortunately, in Canada, there isn't the same kind of investment or incentive climate as there is in other jurisdictions, but it's something that we feel very optimistic about because small wind is now where large wind was 10 years ago.

[The Vice-Chair, Liberal, Alan Tonks]

I'm going to have to interrupt you, Mr. Shory. You've exhausted Mr. Whittaker's and Mr. Harris' time. I'm just trying to be fair to both sides.

Mr. Whittaker and Mr. Scott, thank you very much for being with us. I hope you can stay. We do have another panel that is coming on. We're out of time with respect to continuing this panel, but we do appreciate you being here.

We're just going to break for a very brief time and we'll ask the next panel to come forward. Thank you so much.

[The Vice-Chair, Liberal, Alan Tonks]

We'll recommence with our next panel. This panel is continuing on the subject of alternative and renewable fuels.

We welcome, from the Canadian Solar Industries Association, Elizabeth McDonald, president; and Phil Whiting, president and CEO of EnerWorks Inc. We also welcome Équiterre and Steven Guilbeault—he's not here yet, but we'll play it by ear—and from Pembina Institute, Timothy Weis, director of renewable energy and efficiency policy.

Hopefully Steven will join us, but we'll begin and perhaps just go up to the beginning of the list.

Ms. McDonald, would you like to begin?

[Elizabeth McDonald, President, Canadian Solar Industries Association]

Thank you.

Good morning.

My name is Elizabeth McDonald, and I'm the president of the Canadian Solar Industries Association, known as CanSIA. We are the national trade association that represents the interests of the solar industry across Canada. We have over 500 members involved in manufacturing, development, retail, installation of solar photovoltaics, solar thermal or solar water heating, and solar air.

I'm accompanied by Dr. Phil Whiting, who is the president and CEO of EnerWorks Inc.

[Dr. Phil Whiting, President and Chief Executive Officer, EnerWorks Inc., Canadian Solar Industries Association]

Thank you, Elizabeth.

EnerWorks is Canada's largest manufacturer of solar thermal products. Our technology was developed at Queen's University in Kingston, Ontario, and we now manufacture and export products across North America, into the Caribbean, and soon will into Europe and Asia.

EnerWorks is located in Dorchester, Ontario, an interesting place for a young guy from Nova Scotia.

[Elizabeth McDonald]

We thank you for this opportunity to participate in these proceedings. We value every opportunity to speak with this committee.

Let me begin by reviewing a few technical facts about solar energy. Solar energy not only provides electricity, but it is also used for hot water heating and solar air heating, and soon, solar air cooling. It's a very scalable resource. It adapts to the home, to industrial settings, to large-scale development. It can be built quickly and can be used in almost any energy application, and for the record, Canada does have a good solar resource. We had it almost all week, except for today. It's much better than Germany, which is the poster child for the integrated alternative energy strategy.

We are here today as you review the changes and cancellation of the ecoENERGY programs. We are also pragmatic because we know that for the average Canadian there are two issues: the economy and the environment, so the good news is that every dollar invested in clean energy such as solar is an investment in Canadian manufacturing, local tradespeople, and family households. It is, after all, a local resource.

Canada currently lags behind our industrial trading partners in terms of investing in clean solar energy, and while it is true that many other countries do not share our wealth of natural resources, all of us share the same environmental future. Therefore, we in Canada have an opportunity to grab hold of our future and start to invest in clean, alternative energy technologies and innovation as the world transitions toward a carbon-free economy. In the end, it is what Canadians want: a chance to reinforce our economy and ensure a sustainable future.

CanSIA is aware of the fiscal responsibilities the Government of Canada faces, and we appreciate the efforts made to be fiscally prudent. We are aware that the Government of Canada is investing hundreds of millions of dollars in carbon capture and storage to make our environment cleaner and more sustainable. Solar energy provides another solution to the suite of options available to the federal government to continue reducing greenhouse gas emissions.

Our message today regarding investing in Canada's alternative energy future, in particular, solar energy, touches on five key principles: one, fiscal responsibility; two, job creation; three, innovation; four, greenhouse gas reductions; and five, the impact on family households and small businesses.

Phil.

[Dr. Phil Whiting]

According to a recent C.D. Howe Institute study, solar thermal hot water and solar thermal air technologies, simply speaking, are the most cost-effective investment in renewable energies in Canada, and the most effective at reducing greenhouse gas emissions per dollar spent.

The ecoENERGY program support leveraged this advantage and proved to be a successful way of meeting environmental objectives while providing economic value for Canadian taxpayer dollars. For example, the retrofit energy program invested about $2.2 million since it began in 2007, and yet it was able to reduce carbon dioxide emissions by approximately 3,000 tonnes a year. When we do the calculations, I think we would find that's the best return on investment for carbon dioxide reduction of any of the programs. With an expected lifespan of at least 20 years for solar hot water programs, this comes to a total investment value of about $40 a tonne. When we compare that with other technologies, I think we'll find this produces the best return on investment—and it's really good for Canada.

The ecoENERGY program was also an effective method for job creation. It catalyzed investment in Canadian manufacturing, employing local tradespeople and engineers. Systems have been installed locally across Canada in family households and communities, and also in many businesses and industries. The market has been growing at about 25% to 50% for the past five years. My little company, EnerWorks, has grown over 13 times in that timeframe, creating jobs in Ontario but also across Canada for insulation, R and D, and engineering. It's a very exciting time for us. As well, we've been taking market share from U.S. competitors and from the big European players in this space as well.

The Electricity Sector Council's labour force survey of the Canadian solar industry indicates that job growth is expected to be about 100% per year after 2011. Of course, those calculations were done with the assumption that there would be an ecoENERGY-like program in place. In addition to these benefits, the solar industry in Canada is also beginning to become a more important member of the global trading community, as many of our revenues are now coming from exports outside of Canada.

Under the ecoENERGY program, funds were used to invest in the CSA certification of solar products. This is an extremely important development, and Canada was actually a leader in the field of developing proper safety and performance certification in solar energy. This process has helped to certify approximately 10 companies' products for the marketplace.

With that said, greater investments need to be made to streamline the certification process. This is an area where the federal government can really help. Competition is being reduced at the moment simply because many of the people who want to bring new products into the marketplace can't get their products certified and evaluated. This means that you can develop a product and then wait for a year and a half before you can get it into the market, and that's not good for innovation.

The success of the ecoENERGY programs has also been reinforced by the efforts of almost every Canadian province and territory to develop complementary programs to leverage the administrative strengths of Natural Resources Canada and ensure that energy audits are a part of the process. For example, the ecoENERGY retrofit program to date has provided support to thousands of homes in communities across Canada. So it's more than just about producing solar energy; it's about energy efficiency, lowering the monthly energy costs, reducing carbon dioxide, and creating jobs in Canada.

The ecoENERGY programs have been very effective in reducing carbon dioxide emissions as well. The foundation of the solar industry is solid, as all solar technologies continue to grow at a pace of well over—

[The Vice-Chair, Liberal, Alan Tonks]

Mr. Whiting, could you just sum up, because we're running a little short of time? Thank you.

[Dr. Phil Whiting]

In summary, Canada needs renewable energy. Solar energy, particularly solar hot water, is the lowest-cost and most effective renewable energy source for reducing carbon dioxide emissions per government dollar invested.

[The Vice-Chair, Liberal, Alan Tonks]

Okay, good. I'm sorry I interrupted you, but we try to get to our questions as quickly as we can.

Mr. Weis, would you like to take several minutes now, please?

[Timothy Weis, Director, Renewable Energy and Efficiency Policy, Pembina Institute]

Sure. Thanks.

Thanks a lot for having me here.

I apologize in advance that I'm flying a little bit by the seat of my pants. I've been on vacation for the last two weeks and I only found out about my invitation here on Friday. I'm still technically on vacation, so I found a spot for my kids this morning, but I wanted to make sure I could be here. But I am winging this a little bit, given those circumstances.

Fortunately, I've had a few years to prepare for today because this really is an area that I've been focused on. My job at the Pembina Institute is to focus on renewable power policy in Canada. How I landed there was I started doing a PhD about eight years ago in remote Arctic wind energy development, and I started asking around the industry what the technical problems are that we need to solve. I'm a mechanical engineer by background.

It quickly dawned on me that technology isn't the problem that's preventing renewable energy development. Policies are getting in the way, are slowing down the development; whether it's in the Arctic or whether it's solar power or ground-source heat pumps, really it's policy that's slowing down the deployment, not the technology. So for the last eight or nine years I've been involved in focusing on policy issues and trying to push that forward.

I'm glad we're having this hearing today, and I think it's great that we're looking at the ecoENERGY programs. It's unfortunate we were not doing this last year, because right now we're in the situation where all these programs are going to lapse at the end of the year. Even if you were going to see a renewal of them in next year's budget, there's inevitably a gap between when the budget is announced and when they're ultimately implemented.

So not only are we ultimately moving toward a gap of some of these programs, but we also missed a big opportunity in the last two years where we had all sorts of opportunity to be spending dollars during the stimulus and now we're going into a situation of budgetary constraints. So I think we missed a big opportunity. Nonetheless, I still think it's important to be focusing on these programs and looking at what we can be doing and what we can be doing better. There are all sorts of programs. I know the ecoENERGY suite has about eight or nine programs within it.

The one program I'd like to focus on today will just be the ecoENERGY for renewable power program. I certainly don't want to exclude the other discussions, but it's just for the sake of time. The reason I think that particular program is important is because it's important to talk about the scale of development that we need to have in Canada over the next 10 years. This government has set an impressive target of trying to get to 90% non-emitting electricity by the year 2020. That's only 10 years away, and in electricity terms that's basically tomorrow. We have to have programs in place that are going to make that happen, and we have to have them in place today if we seriously want to meet that target. That's not going to be an easy challenge to meet.

I think what's also important to talk about is the scale of what's technically possible. We've seen other countries meet this type of challenge in 10 years if the government is determined to do so. Denmark is the classic example: it went from zero or about 2% wind to about 20% wind in about 10 years. Right now the state of Texas has three times as much wind power as all of Canada. So we're talking about technology that can be deployed very quickly and integrated in very large scales, if we want to do that.

One of the problems in Canada, though, particularly with the ecoENERGY program lapsing, is that we don't really have a national cohesive policy any more. I've had manufacturers ask me directly why they would invest in Canada when they have 10 different countries they have to deal with as opposed to one sort of national overview, or framework, I guess, to invest in. So I think one thing that's missing in Canada is to have a national strategy, a federal outlook on renewable development.

There are four things I want to say in terms of where I think we should be going in the next few years.

Obviously a carbon price is the one thing that everyone knows is inevitable and is needed to recognize the fact that we cannot continue to use the atmosphere as a garbage can. But we're not there yet, and we're not going to be there for a few years, and at this stage in the game it looks like we're waiting to see what the Americans are going to do before we get on with putting a price on carbon. So in the interim, in the next four to five years, until that world is a reality, we do need to continue to support these technologies if we want to meet our climate change goals as well as the government's targets for renewable energy.

A national strategy is another thing I think we need, at least. We have a positive example with the Council of Energy Ministers working on energy efficiency. I think a similar example around renewable energy would be something that would be important to look at.

Going forward, I think we also need to be considering strategic investments in the non-low-hanging fruit.

Right now we're supporting technologies through the ecoENERGY program. It supports wind, solar, biomass, and technologies that are fairly commercial and fairly accessible. Those technologies have all been developed--and I'll use wind as an example--in the windiest areas. We're going to need to be looking at programs that support wind in areas that aren't as windy, or areas that are going to need grid extension or a little more support.

I think that's where we need to be thinking about where the programs need to be going in terms of beyond the low-hanging fruit.

Finally, the last thing I think we need to consider is looking at the Arctic and renewable energy in remote communities. We have about 200 remote communities right now, and most of them depend on diesel power. It's incredibly expensive to get power up there, and at the end of the day it becomes unsustainable for those communities. We have Canadian technology that's been developed to look at wind-diesel hybrids, for example, and most of that technology is currently being exported into Alaska.

Sarah Palin, when she was governor, put $250 million into wind energy development in Alaska. They have about 30 projects on the go right now. We have one operating in Canada and one other being developed in the Northwest Territories. Basically we're exporting Canadian technology to Alaska, but we're not using it here domestically. I think that's another important opportunity that we need to consider.

I think I'll wrap it up there. The point I really want to make at this stage is that this is a strategic time to be investing. The scale of investments we need to talk about are beyond the token investments and beyond treating renewables as a fringe or side market. We need to be seriously considering renewables in terms of the type of development they can be: 10%, 20%, or 30% of our overall electricity supply. We can consider renewables as being a major opportunity to get us to the government's target of 90% non-emitting by the year 2020.

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Weis.

We now have been joined by Mr. Guilbeault. Welcome.

We've been taking about seven minutes for presentations and then we go into questions.

You'll be the last presenter, Mr. Guilbeault.

[Steven Guilbeault, Deputy Executive Coordinator and Co-founder, Équiterre]

Thank you, Mr. Chair. I would like to thank the committee for inviting me here this morning. I apologize for being late; there was a traffic jam at security.

My name is Steven Guilbeault. I am the Deputy Executive Coordinator of Équiterre. I am also co-chair of the international Climate Action Network, an organization of over 500 non-governmental organizations that works with the United Nations on climate change. In addition, on behalf of the Minister of Natural Resources and Wildlife of Quebec, Nathalie Normandeau, I chair a special team on emerging renewable energy sources—but I am not here today in that capacity. The issue you are interested in has interested me, personally and professionally, for several years, but particularly in recent months, in relation to that office.

I would like to echo what Mr. Weis said earlier. First, I would like to start a little farther back to get a little closer to where we are. When we examine the global situation, we have seen, since the early 1990s, that the forms of energy production with the highest growth rates, whether in terms of jobs or investment, are renewable energy sources—wind energy, solar energy.

In February 2009, the HSBC Bank produced a report that you have certainly heard about. The report studied the G20 countries' economic recovery plans. The report noted that on average, in the industrialized countries, investments in green energy accounted for about 15% within the economic recovery plans. However, what we find behind that fact is that the countries that are investing the most, in absolute or relative amounts, are not the industrialized countries at present, but the emerging nations like China and South Korea.

South Korea is going to invest 82% of its economic recovery plan in the green economy—renewable energy, energy efficiency, sustainable transportation and clean technology. China is investing 36%. In absolute terms, China is making the largest investment in clean technology ever seen in history. This is even more than what is being done in the United States or even Europe—it will be 55% in Europe.

Where does Canada stand? We are at half the average for the industrialized countries. According to the HSBC report, Canada is not the worst country: it ranks fourth among the least bad countries in terms of investment in renewable energy. That was before the last federal budget, in which the money for the ecoENERGY program was not renewed. As a result, I imagine that if HSBC did its study over, Canada would lose more ground in the technological innovation race taking place before our eyes. Deutsche Bank has released a very similar report about three weeks ago.

What is the conclusion reached by these major research groups, these investment banks, and the International Energy Agency? Essentially, it is that the economy of the 21st century will be a clean and sustainable economy or it will not be. Massive investments are being made everywhere—I referred to South Korea earlier. Between 2009 and 2011, 150,000 jobs will be created in the clean technology sector. That is somewhat as if South Korea had taken virtually all program spending in Mr. Flaherty's last budget and invested it all in renewable energy, clean technology and energy efficiency.

What is happening is that Canada is rapidly losing ground... In fact, it is an ecological disaster, of course, because sources of energy production in Canada as a whole are still largely based on fossil fuels. As Tim said, if we want to meet our objective of having 90% of our electricity production sources in non-greenhouse gas emitting forms by 2020, it is possible to do it, but we have to adopt the measures for doing it fast. Tim gave the example of Denmark, but there are several examples of countries that have done it that are worth looking at.

That is exactly what we have done in the work done by the committee I chair for the government of Quebec. We observed what was going on at the global level, what examples were the most worth considering, and we asked how it could be adapted to the situation in Quebec. I don't see why we would not do the same thing at the national level. We have to look at what business opportunities there are in terms of technological development, job creation and adopting these technologies, in particular in industry, [inaudible]. When we talk about clean energy, obviously there are water and geothermal technologies. There are a lot that tackle reducing greenhouse gas emissions. In fact, that is where a majority of investments are seen. What is astonishing is to see how completely absent Canada is from this at present. We are missing the boat.

We could always say that this is not the role of the federal government, but when we look at examples—Tim talked about Denmark—like Germany, we see that it worked with its regions to create a major, massive, gigantic program to develop renewable energy, and did it in the space of 10 years. In the worst cases, over the last 10 years in Germany, regardless of the type of technology—whether biofuel, wind or photovoltaics—the Germans have doubled their production capacity from 10 years ago. In the best cases, they have increased production of these forms of energy by 300 or 400 or sometimes even 500%.

I was talking about China a moment ago. Two years ago, at a United Nations meeting, I had an opportunity to meet with the richest industrialist in China. He told us that when he finished university, he and his friends decided to start up a company manufacturing solar panels. Since the company was created, it has had an annual growth rate of 100%. Today, Suntech is the largest manufacturer of solar panels in the world. I built a small ecofriendly house that operates partly on solar energy. Part of the solar panels was in fact manufactured in China. You see them now in some of our hardware stores. You go to Canadian Tire or Rona and you will see solar panels often made in China. So we could be in this race. There is even a solar panel on the room of my house made by a little company you may have heard of, called Shell.

The energy industry is changing very rapidly. In the world as we know it, the economy and energy are becoming increasingly closely related. Unfortunately, Canada is not at the table. The federal government can play a very important role in supporting provincial initiatives, as other governments are doing. The British, for example, with interest-free loans to install solar systems on the roofs of houses. The system will stay with the house because obviously people are not going to leave with it.

Wallonia, which has about 25% less solar potential than all of Canada, has new regulations made in 2006 where all new residential construction has to be equipped with solar systems, whether for heating water or air or for producing electricity.

So there is a very important role that the federal government can play and is not playing at present. Obviously, this has disastrous consequences for our greenhouse gas emissions, for Canadians' quality of life, for the quality of our environment. But on top of all that, it will have disastrous consequences for Canada's competitive advantage over the next few years.

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Guilbeault.

Now we'll go to questions, and Mr. Bains is first.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you very much, Chair.

I want to thank everyone for coming this morning.

One thing I'm very pleased to hear about with respect to the discussion this morning is that there is a clear understanding that the environment, energy, and the economy cannot be treated independently, that they're strongly linked. That's very important, because that's taking place now in the public domain in terms of educating people. When we talk about the environment, it's not simply to reduce greenhouse gas emissions. There is a connection to our energy mix, which connects to our economy as well. And that was interwoven in everyone's comments, which was encouraging to hear.

My questions pertain to some of the comments made by our earlier witness, Mr. Whittaker. He's a representative from the Canadian Wind Energy Association and he indicated that in his discussions with the department and the minister's office he heard very loud and clear that there is a change in direction. Post March 2011 no new projects will be accepted for the ecoENERGY program, and the government is moving toward regulation and carbon capture and storage to deal with some of the initiatives we discussed this morning.

I want to speak specifically to how this will impact the solar industry, because I know from your remarks that this change in the government's direction, especially when the ecoENERGY program and the fact that there will be no new projects post March 2011.... How will this impact the solar industry in terms of jobs? As I said in my earlier remarks, it's not simply about the environment; it's also about jobs. How will it impact investments in terms of our competitiveness and how we compete with the U.S. and other jurisdictions? Also, how do you think this will impact our overall solar targets in the overall mix of our energy portfolio?

[Elizabeth McDonald]

Let me begin, and then I'll let Dr. Whiting finish.

Mr. Whittaker was talking about the ecoENERGY for renewable power program, which has really not been as significant for the solar industry.

We are here talking about the ecoENERGY retrofit program and the other programs that are--

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

That would have a similar impact, or maybe not the same impact, but that's also being changed—

[Elizabeth McDonald]

No, they're different industries. The photovoltaics industry is in a different situation, and I don't think it is having as much of an impact on the investments, because they're particularly in Ontario. Large-scale investment is just outside of Ottawa, actually, as well as across....

I think Dr. Whiting is better able to talk about the solar thermal and solar air impacts.