Natural Resources Committee on Oct. 25th, 2012

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, that would be very helpful. The federal government expenditure compared to other national governments or other federal governments is comparing apples to apples, of course. I think that would give us a fair indication of how far down Canada is.

To follow up on that, I wanted to get a sense of the overall federal government spending. This is very helpful here: it's $468 million in terms of R and D, if I'm reading this correctly. How does that compare in terms of other grants, subsidies, and tax credits that go to the non-renewable sector?

There's been a lot of debate around the grants and subsidies given to oil and gas companies. How does the federal expenditure on energy R and D compare with the overall spending by the federal government to support the oil and gas industry?

[Dr. Marc D'Iorio]

Again, I'm not a finance person. I work on the R and D side, so I don't have the numbers on tax credits or other incentives that might be in place and directed to renewable or non-renewable energy.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Are those figures you could provide to the committee? I think that would be very helpful as well.

[Dr. Marc D'Iorio]

I think the Department of Finance would probably be the right department to provide these types of figures.

[Martin Aubé]

Yes, and I also would refer to the Jenkins report, which did quite an extensive analysis of government support to business R and D. It looked at both direct and indirect measures of support for research development.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, I understand that. What we need, though, as a committee is the percentage that's spent on R and D compared to all other grants and tax credits to the industry, because, of course, we want to maximize the taxpayers' value.

You're suggesting to us that we talk to the finance department about that. Okay, duly noted, and we'll ask the clerk to follow up.

You've mentioned in this presentation that we spend approximately $795 million largely for CCS. What would be the overall budget allotted to CCS?

[Dr. Marc D'Iorio]

It's in the clean energy sum; of the $795 million, approximately $600 million was for CCS and $150 million for small-scale demonstration of renewable energy. Then the balance was for R and D and administrative costs.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Do you have any evaluation on that investment? I'll explain why I'm mentioning that.

Lorraine Mitchelmore, who's president of Shell Canada, has said that we absolutely need to put in place a price on carbon, a cap and trade system. As she says, carbon management has to be part of the plan for CCS. Of course, Conservatives promised in 2008 to bring in a cap and trade system, and that's the NDP policy as well.

We're spending a considerable amount of taxpayers' dollars and we have people from the industry telling us very clearly that we need a cap and trade system, a price on carbon, so that the huge taxpayer investment $600 million is actually well used. I'm wondering to what extent within the ministry you're evaluating that cost, which is enormous—hundreds of millions of dollars—and to what extent there is discussion within NRCan about doing what the Conservatives promised to do and what industry is pushing us all to do: put in place a price on carbon, put in place a cap and trade system.

[Dr. Marc D'Iorio]

On carbon capture and storage, the demonstrations, such as they are right now, are early days. It's an early investment. The IEA expects that by 2050 CCS could account for a reduction of 20% of the reduction required in global GHG emissions. In Canada and Alberta, it could be much greater than that. Investment by the government is in very early-day demonstrations of that type of technology to see what the barriers are from a technology perspective while working with provinces as well. The provinces are looking at their regulatory framework. That's how they adopt that type of technology.

Again, this would be a policy question. We're working on the demonstration side, trying to make sure that this is a technology that will work as it gets deployed on a much broader scale.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian. Your time's up.

We go now to Mr. McGuinty. You have up to seven minutes.

Go ahead, please.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Chair.

Thank you very much, gentlemen, for being here this morning.

Could I just go to 10,000 feet per second? We are indeed looking at a study here on innovation in the energy sector. Would you agree that globally there's a race on right now to become the most efficient economy in the world? I don't mean efficient just in terms of energy use but also in terms of materials use and, for example, water use.

[Dr. Marc D'Iorio]

I think every country is looking at its own resources and the best way to manage resources and use them effectively. From that point of view, countries are looking at how they'll use their resources and water. Canada is well endowed. It has 20% of the water resources in the world and has quite a large proportion of the energy resources as well, as we talked about earlier.

[David McGuinty, Liberal, Ottawa South, ON]

We talk about innovation, right? Why are we trying to innovate? What's it all about? Isn't it about becoming better at using either less energy or less material and water input? Isn't that what innovation's really all about?

[Dr. Marc D'Iorio]

Innovation is, as well, sustainable development. There's an economic side to it and there's an environmental side to it, while respecting the social side of the development. It's really a balance of things. From my perspective, when you invest in innovation, you have different purposes. Clearly there's an economic side to what you're doing and there's an environmental side to what you're doing, and often the two are very much linked.

[David McGuinty, Liberal, Ottawa South, ON]

But if we just narrow into innovation in an energy context, we're trying to innovate because we're trying to use less energy to do either more things or the same number of things we're doing. Isn't that right?

[Dr. Marc D'Iorio]

Using less energy also means emitting fewer pollutants and producing fewer tailings, so again they're very much linked.

[David McGuinty, Liberal, Ottawa South, ON]

I understand.

Would you agree with me, then, that there is a global race on right now on the energy innovation side, a race to be able to use energy as efficiently as possible?

[Dr. Marc D'Iorio]

I think all innovation is a competitive process, whether it be done in universities or industry.

[David McGuinty, Liberal, Ottawa South, ON]

In your deck, Mr. D'Iorio, there's an awful lot of reference to spending. That's not an unimportant thing. You talk a lot about how much the government is spending. However, I want to get some indication from you where Canada ranks in energy efficiency and what metrics we are using.

[Dr. Marc D'Iorio]

We often look at efficiency as an end-use type of a process, so looking at whether it's industry, buildings, communities, or transport—

[David McGuinty, Liberal, Ottawa South, ON]

Let's look at energy efficiency in terms of energy inputs in the oil sands, as an example. There are massive energy inputs to get the bitumen out of the ground and transform it. That's not at the back end and it's not at the consumption end; it's at the production end, the beginning of the cycle.

Is there an internationally accepted efficiency metric that Canada is participating in? Where do we rank? On page 6 of your deck, you say that we're third in hydro, second in uranium, third in natural gas, but where are we ranked in efficiency, or more specifically, where are we ranked in innovation?

[Dr. Marc D'Iorio]

It all depends which metric you want to use for innovation.

Efficiency again depends on the type of resource you're looking at. It's clear that heavy oil will always be more difficult to extract, and most of the oil reserves globally, going forward, will be produced increasingly from heavy oil. It all depends on the geological context where you extract this; it depends on whether you're dealing with oil sands or other types of host rock. It becomes very difficult to adopt a single metric for efficiency of production, depending upon what your end product is.

A lot of work has been done trying to identify it specifically by taking measures such as how much you produce in GHGs to produce a certain type of oil, how much in fugitive emissions you have, how much flaring you do in gas production. Again, the metrics are very dependent on the context—

[David McGuinty, Liberal, Ottawa South, ON]

We have a chart here, on page 8, that talks about how much we're spending on public energy R, D and D.

Are you saying to me that there is no international comparison, with acceptable metrics across countries, on, for example, efficiency?

[Dr. Marc D'Iorio]

There are a number of metrics that people can look at, depending again upon the context, if you're looking at oil and gas production.

[David McGuinty, Liberal, Ottawa South, ON]

Okay; it depends on the energy source.