Natural Resources Committee on April 27th, 2010

[Dr. Phil Whiting]

There's absolutely no doubt that it will have an impact. This is still a relatively early stage industry. We provide a very good return for our customers on their investment, but at the end of the day, it's really about convincing a homeowner to spend money now to save money later. It's very difficult to do that in today's climate without some additional incentive being provided up front. There's absolutely no doubt that the cancellation of this program will have an impact on our business in the residential market.

There will be a secondary impact on our business, which I think is perhaps even more devastating. We've already seen a number of the dealers and installers for our product basically decide that they're probably not going to continue in this industry. The problem is the rapid change, the unexpected change, that occurred. One of the things that experience around the world has shown is that for government incentives really to be successful in helping to build an industry, they need to be sustained, and sustainable themselves. When there are rapid changes back and forth, in the world of business people say, I'll invest my money elsewhere.

Right now, I'm a small company trying to raise investment capital to grow my business in Canada. I had an investment group that was very close to putting substantial money into the business, and they're probably going to walk now. They're saying, we can't be sure the market in Canada for your product is going to be there. They've seen what happens in other places.

Over time, this industry will be able to sustain itself without the benefit of incentives, but today it still needs that.

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

When you say “walk”, where will they walk? Can you give an example?

[Dr. Phil Whiting]

Investors always have other options to invest. They will look to other investments. The hot place in solar thermal right now is in the U.S., actually.

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

That's what I was getting at. These jobs, these investments, will go down south.

[Dr. Phil Whiting]

Oh yes, absolutely. Personally speaking, I'm recruited on a regular basis from states in the U.S. to pack up my business and move it to the U.S. I'm doing everything I can to resist that because we want to build these jobs here.

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

I'm glad to hear that, especially for Ontario. That's very important. As a member of Parliament for the Mississauga area...we have a direct and indirect impact from these jobs that are created.

With respect to the return on investment, I know you made that comment earlier. We heard from the Canadian Wind Energy Association that they get about $1.30 back on their return on investment, direct and indirect, to government. Have you done that type of analysis in terms of the return on investments? How do you measure that? You've mentioned a few times that it's a really good return on investment. How do you determine that? How do you calculate that?

[Dr. Phil Whiting]

Typically, solar hot water projects return for the customer, whoever that is, a return on investment in the 12% to 15% per year range. From that perspective, we're the best investment.

I haven't done the calculations the way the wind guy did his calculations, but there's a lot of independent research that shows that solar hot water is a less expensive form of renewable energy than wind, typically by about 50%. If he can return $1.30, I can probably return $1.75 or $2--back of the envelope, without having done the calculations carefully.

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

I appreciate that. I understand you have a different metric of calculating return on investments. I just wanted to gauge how that would compare.

[Dr. Phil Whiting]

We know we produce renewable energy in the form of hot water at less than half the cost of energy produced by wind and about one-fifth the cost of energy produced by photovoltaics. Those aren't my numbers; they're other peoples' numbers.

However the math gets done, we're going to be better.

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

Okay. Good to hear.

I have a question for Mr. Weis.

In terms of the comments you made about our targets for 2020 and the 90% target the government has set for non-emitting electricity--I think you were saying by 2020--where does the current number stand right now? Where does Canada stand right now? What percentage are we at right now?

[Timothy Weis]

The way it was defined in the throne speech it was large hydro, nuclear, coal with carbon capture and storage, and renewables. If you take those four together, we're at about 77%.

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

At present we're at 77%, based on that formula.

[Timothy Weis]

Yes, and this is nationally. Obviously, the provinces are all very different. You've got certain provinces like Alberta at about 70% coal; then you've got a province like Quebec, which is almost 99% hydro.

[The Vice-Chair, Liberal, Alan Tonks]

I'm going to have to interrupt you there. Perhaps we can come back in the second round, if you could just hold that one.

We'll go to Madame Brunelle.

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

Good morning. Thank you for being with us, in spite of the bad weather.

Mr. Guilbeault, this morning I have heard about the damage associated with cancellation of the ecoENERGY program and the fact that there is no federal national strategy. On that point, however, we might take a look at what that means in terms of jurisdiction. In any event, the government certainly has no long-term vision.

Mr. Whiting told us that this would hinder development. In terms of the absence of a carbon market, there is no absolute reduction target. That is a problem. Mr. Weis talked to us about policies. If I understood correctly, these are government policies, and they are harming the development of ecoENERGY programs.

What impact is this going to have on the development of renewable energy? Do you have the impression that we are going to fall so far behind we will be unable to catch up? The other witnesses can answer as well.

[Steven Guilbeault]

I think we have already fallen very far behind. Some countries have already been investing in this field for several decades.

I would like to come back to what Mr. Whiting was saying earlier. All forms of energy are subsidized: oil, nuclear, etc. So we must not think that we are creating a category of exceptions with renewable energy. Look at the money that has been invested in the oil sands in Canada over the last 35 or 40 years. We are talking here about a massive investment, continued year after year, whether through direct subsidies, tax shelters, accelerated tax write-offs, or other methods.

We are not asking for an exception for renewable energy; we are asking that there at least be some balance among the various forms of energy, in terms of financial and economic benefits and incentives. That is obviously not the case. But these technologies are going to play an increasingly important role in the world portfolio. In fact that is already the case. They have quadrupled since the early 1970s. Because we are not investing in these technologies, we are going to have to import them, to buy them from other countries. That is where jobs will be created and investments will be made. It won't be in Canada because we have not created a regulatory, financial or economic climate that favours this kind of investment. The investments are going to be made elsewhere, and we are going to become importers of these technologies. Hundreds of thousands of jobs are going to be created elsewhere rather than here.

[Timothy Weis]

I totally agree that we are late to the game with most of these technologies. That's not to say that we're out of the game, either. I think Spain is a good example to look at. It was basically 10 years behind Denmark and 10 years behind Germany in investing in wind power, and they're the third-largest manufacturer on the planet right now. At points in time in Spain they can get 40% of their national grid from wind power--just from the wind. Even though they were a decade behind, they were able to ramp up very quickly when they invested in a serious way.

We're definitely late to the game, but I don't think we're out of the game, either. We have many technologies in Canada. I think solar is the one people overlook all the time in Canada. We have solar hot water companies. Technologies have been developed in Canada and researched in Canada. There are solar walls, for example. Heating of industrial buildings with solar walls is a technology that was invented in Canada. It's almost obscene that we don't use it and make it mandatory on every new building, because it pays for itself, typically, in one to two years when you're building a new building. There are technologies we're definitely behind in. But there are also technologies that we risk losing, particularly in the solar area, if we don't support that particular industry.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you.

Dr. Whiting wanted to get into that. Dr. Whiting, did you wish to comment?

[Dr. Phil Whiting]

I think the question was answered already.

[The Vice-Chair, Liberal, Alan Tonks]

All right, good.

I'm sorry, go ahead, Madame Brunelle.

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

I would like to know your opinion about carbon storage and capture projects.

In the last budget, $1 billion dollars was provided for renewable energy, $800 million of which was for carbon storage and capture. This committee has examined that. It is still somewhat worrisome. These are projects that seem not to be really grounded in science. Concerns have been expressed about water tables, about the type of rock used.

Do you think we should put all our eggs in one basket? My question is for all three.

[Dr. Phil Whiting]

I'm happy to comment on that. From my perspective as a business person, it's about the best investment of our dollars, and in particular our taxpayers' dollars. So I would look at all the renewable energy technologies and ask myself, in spending x number of dollars, how I would create the most jobs and reduce the largest amount of carbon dioxide? If you ask that question, with today's state of the technology, I don't think carbon capture would pass muster. I think it would be at the bottom of the list along with biofuels and other very expensive technologies, and solar and wind in particular would be at the top of the list.

[Steven Guilbeault]

I agree entirely with Mr. Whiting. Your question relates to development of the technology and investing public funds in those technologies. On the other hand, we are putting all our eggs in one basket, when this technology has not been tested. It is still at the research and development stage. I have no objection to oil companies investing in it, they have every right to do so. But I object to investing the little money allocated for what is called renewable energy, in Canada, in that kind of technology. We really are not certain that it will enable us to reduce greenhouse gas emissions, and if it does, we don't know the amount of time for it to be possible. It may be in 15 or 20 years. But we have Canadian technologies today that we could bring forward and that would enable us to reduce those emissions immediately. It's total nonsense.

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

I have one short question, Mr. Whiting, about solar energy. We have an image in our heads of the 1970s, when a few crackpots out in the country were trying to heat their houses with solar energy. Can you give us an idea of size? You tell us you have grown your market share, but do we have a lot of solar energy? Is it widely used in Canada, and where?

[Elizabeth McDonald]

I'll take the first part of that.

You're talking about solar photovoltaics. In Ontario, we're close to 100 megawatts. We have a solar farm outside of Ottawa, which is 24.3 megawatts that will light up 7,000 houses. We're probably going to see in the next three to four years somewhere around 500 to 600 megawatts in solar photovoltaics in Ontario because of the feed-in tariff program. However, in the rest of Canada it's still off-grid in some solar electricity, but not a great deal.

As for solar thermal....