Natural Resources Committee on Nov. 20th, 2012

[The Chair, Conservative, Leon Benoit]

I call the meeting to order.

Good morning, everyone.

Before we get to our witnesses today, we have two orders of business to quickly complete. The first is a motion by Peter Julian that the committee invite the minister to deal with the supplementary estimates (B). We certainly agree with that. Mr. Anderson has talked to the minister. I would just propose a friendly amendment to the motion. Instead of saying “before December 4”, it would say “on or before December 4”. The minister probably can come on December 4. Can the committee agree to that change?

Go ahead, Mr. Julian.

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

Thank you very much, Mr. Chair. I appreciate the agreement of the Conservatives on this matter. There are a lot of other things we could propose too, if the Conservatives are in a welcoming mood. As far as this is concerned, I think it will work out very well if it's on December 4.

[The Chair, Conservative, Leon Benoit]

Thank you.

The second item is just the formality of passing the budget to bring witnesses to this committee and do the teleconferencing and that type of thing. The estimated budget is $31,500, as you see before you. It was sent to you last night. Is it agreed that we pass this budget to deal with the costs of the committee? Is that agreed?

[Some hon. members]

Agreed.

[The Chair, Conservative, Leon Benoit]

Those items of business are complete.

We will get to the main business of the committee today, which is to continue our study on innovation in the energy sector. This is our second meeting on this matter. We had departmental officials on the first day.

Today we have with us, from the Canadian Association of Petroleum Producers, Bob Bleaney, vice-president, external relations. Welcome, sir. From the Canadian Association of Petroleum Producers, by video conference from Calgary, we have Greg Stringham, vice-president, markets and oil sands. We have Dan Wicklum, chief executive of Canada's Oil Sands Innovation Alliance. From the Petroleum Services Association of Canada we have Mark Salkeld, president and chief executive officer. We have Wally Kozak, engineer chief, global services, Calfrac Well Services Ltd. We have Mark Bentsen, president and chief executive officer, Cathedral Energy Services Ltd. By video conference, from the Pembina Institute, we have Tim Weis, director, renewable energy and efficiency policy. Welcome, Mr. Weis.

As well, by video conference from London, United Kingdom, from Climate Change Capital, we have James Cameron, chairman. Mr. Cameron, can you hear us?

[James Cameron, Chaiman, Climate Change Capital]

Yes, I can. Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

Those are our witnesses for today. We will now take the presentations of up to 10 minutes. I understand that the time will be split between Mr. Bleaney from CAPP and Dan Wicklum from Canada's Oil Sands Innovation Alliance.

You have five minutes each, or whatever it works out to. You have up to 10 minutes, starting with Mr. Bleaney. Go ahead with your presentation, please.

[Bob Bleaney, Vice-President, External Relations, Canadian Association of Petroleum Producers]

Good morning, Mr. Chairman and members of the committee.

My name is Bob Bleaney. I am the vice-president of external relations of the Canadian Association of Petroleum Producers, or CAPP, here in Ottawa. We represent Canada’s upstream oil and gas sector, and our members find and develop about 90% of Canada’s petroleum resources. Our industry is the largest private sector investor in Canada, investing over $50 billion each year and employing well over half a million Canadians.

With me today by video conference is Greg Stringham, CAPP's vice president of markets and oil sands, as well as Dan Wicklum, the CEO of COSIA. CAPP and COSIA are co-sharing this opportunity to present to you today.

It is important to develop and grow Canada’s resource sector for the benefit of all Canadians, providing jobs, economic growth, and revenue to Canadian governments. Canada is advantaged by having a vast endowment of petroleum resources, ranking number three in world oil reserves with 174 billion barrels of oil, and number three in natural gas production. With this endowment, technology development and innovation remain fundamental to our industry’s future.

Canada’s oil and gas resources are increasingly unconventional in nature and more difficult to develop and produce. Canadian costs are high by international standards, and we are challenged by competitiveness issues such as scale, geographic location, and the size of market. Competitiveness is key to attracting the investment capital required to continue to grow and access new international market opportunities, and we need to continuously improve on environmental and social performance. Technology and innovation must largely drive this improvement and are key to informing and grounding public policy and regulation as it applies to our sector.

Some key barriers we see are as follows. Most of our industry’s R and D takes place in large industrial environments that are not dependent upon direct federal funding. Innovation in our industry is largely in the form of improvements to existing technology, often developed through field testing to prove out research hypotheses. Improvements in technology can deliver very significant benefits in large-scale developments, but it can be challenging to fund the pilot project work and the field testing that is critical to evaluate such technology.

The most important vehicle to support this R and D has been the federal scientific research and experimental development program, or SR and ED. The recent changes to SR and ED, removing the eligibility of capital expenditures and reducing the general rates and allowances, will serve to erode capacity for innovation. Instead we should be increasing accessibility and eligibility in order to enhance the pace of innovation deployment and commercialization.

There is a need for greater collaboration and networking on the technology development side as well, both within our industry and with stakeholders, driven by the competitive nature of industry and the fragmentation of effort among industry, academia, governments, and research institutions. We are making significant improvements in some areas, as you’ll hear from my COSIA colleague, but we'll need to focus more broadly on the more specific innovation needs across Canada’s upstream petroleum sector.

Notwithstanding these challenges, our industry has delivered considerable innovation success. The oil sands industry has continuously advanced technology to improve access to Canada’s immense oil resources and to improve our production, energy efficiency, and environmental performance. Horizontal drilling and hydraulic fracturing technology to access unconventional gas, and more recently, tight oil resources, are also game changers. Our industry has been successful in applying and enhancing this breakthrough technology in Canadian applications.

To conclude, we must continue to grow Canada’s resource sector for the benefit of all Canadians, and as an industry we have made significant steps forward and are committed to innovation and performance improvement in order to ensure our global competitiveness, our access to international markets and investment capital, and our social licence to operate. We should focus support for innovation and technology development in areas where we can best leverage Canada’s competitive advantage: its vast endowment of oil and gas resources. It's through greater focus, collaboration, and more accessible SR and ED support that Canada can best lever this advantage.

I’d now like to turn the presentation over to COSIA.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Bleaney.

We now will go for a little bit over five minutes to Dan Wicklum, chief executive for Canada's Oil Sands Innovation Alliance. Go ahead please, sir, with your presentation.

[Dan Wicklum, Chief Executive, Canada's Oil Sands Innovation Alliance, Canadian Association of Petroleum Producers]

Thank you, and good morning. It's a great opportunity to be able to speak with you today.

I'm here to tell you about an organization called Canada’s Oil Sands Innovation Alliance, or COSIA. COSIA is an alliance of 14 oil sands producers that collectively account for about 90% of the production in Canada's oil sands.

These organizations came together on March 1, 2012, to formally launch the alliance, and at that launch the CEOs of these companies stood up very publicly on a stage here in Calgary and signed a charter. The charter was a collective and very public expression of a commitment to a vision and a commitment to a certain suite of actions and behaviours that would allow the companies to realize their vision.

The vision is to enable the responsible development of Canada's oil sands while accelerating the pace of environmental performance improvement through collaborative action and innovation. To our knowledge, there is no other organization that uses the same model, certainly not at the same scale or size that COSIA has, anywhere else in the world, so we're quite proud of it.

What makes COSIA unique? We speak in terms of “the four Ls”.

The first “L” is leadership. The oversight of COSIA and the work on our four environmental priority areas—water, land, tailings, and greenhouse gases—will include input from the chief executive officers of the companies, with support for our activities extending throughout the individual companies.

The second “L” is what we call line of sight. COSIA is not an organization simply about effort. It's an organization about effort to attain specific ends. The ends are regional environmental improvement and performance goals that we will set publicly, and we will report progress publicly against those goals.

The third “L” that makes COSIA unique is leverage. COSIA will be the collaborative hub through which environmental innovation developed by individual companies will be shared. It will enable participating companies to work together to avoid duplication of effort, to share their innovation defined from things as hard as intellectual property, such as a patent, although it could be the other end of the spectrum of things, such as best practices, research data, and monitoring data. This will be the hub through which innovation can be shared. We will work to avoid duplication of effort; leverage our collective expertise, technology, data, and best practices; and build on one another's successes to improve the pace of environmental performance improvement.

The fourth “L” is linkages. COSIA is founded on the concept of openness, and we will connect with those developing innovative solutions to environmental challenges within and outside of Canada with a view to sharing that innovation to advance performance inside our environmental priority areas. We will listen to, respond to, and work with stakeholders to address evolving needs and conditions.

The oil sands producers have made great strides in increasing the efficiency and reducing the environmental footprint of oil sands production during the first half of commercial development of this resource. Frankly, this progress was made by companies acting independently. By forming COSIA, what industry leaders have done at the highest levels is identify that when it comes to environmental performance, a collaborative model is a better way to advance innovation and accelerate the pace of environmental performance. Through COSIA, intellectual property, funding, and human resource barriers will be removed that otherwise would have impeded progress.

Canada's oil sands represent a tremendous strategic asset for this country. The companies that will realize the value of this asset for Canadians share a solid determination to make the oil sands a showcase of world-leading environmental innovation and environmental performance.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much for that presentation.

We go now to the Petroleum Services Association of Canada. I understand that Mark Salkeld, president and chief executive officer, will make the presentation. With him are Wally Kozak and Mark Bentsen.

Go ahead with your presentation please, Mr. Salkeld.

[Mark Salkeld, President and Chief Executive Officer, Petroleum Services Association of Canada]

Thank you very much.

Good day, and thank you for the opportunity to present to the committee.

My name is Mark Salkeld. As mentioned, I am the president and CEO of the Petroleum Services Association of Canada. PSAC is a national trade association representing the service, supply, and manufacturing sectors within the upstream petroleum service industry. We represent a diverse range of almost 260 member companies employing more than 65,000 employees and contracting almost exclusively to oil and gas exploration and production companies.

PSAC member companies represent over 80% of the business volume generated in the petroleum services industry. Our members cover 17 subsectors in the oil field services sector.

As mentioned, I am joined by two colleagues, Mr. Wally Kozak of Calfrac Well Services and Mr. Mark Bentsen of Cathedral Energy Services, who are experts in the fields of hydraulic fracturing and directional drilling respectively. Mr. Kozak is also chair of the Canadian Society for Unconventional Resources.

We appreciate the opportunity to speak to you today about a few of the technologies being deployed by Canada's oil and gas service industry. These very significant technologies have allowed a major resurgence in oil and gas resource development for Canada and for North America as a whole.

The oil field service sector in Canada is relatively young. It was just 60 to 70 years ago that hydrocarbon resources were discovered in significant quantities, owing to American-based producers bringing rigs and related services from the U.S. to wildcat wells in the Canadian west. Since then, the Canadian oil field services sector has evolved from steam-powered cable tool rigs to AC electric rigs controlled by programmable logic controllers and variable frequency drives. This is just in reference to the rigs.

There are now vast fleets of equipment deployed in the drilling and completion of oil and gas wells. The complexity of the wells and the drilling activity requires constant innovation, and Canada's petroleum services industry has become exceptionally specialized, which is a reflection of the technology innovation that is positioning many of our members as global leaders.

In 2009, just 36 of PSAC's Canadian-owned and Canadian-operated member companies, based in Canada and paying federal and provincial taxes, generated $12.8 billion in export revenues from energy services knowledge, technology, and manufacturing sales around the world. This is a significant factor for the increasing interest by foreign investors to tap into the technology we are developing, testing, and proving effective here, which can easily be adapted to work anywhere in the world.

Another significant underpinning of Canadian oil field innovation is the ever-increasing efforts and collaboration between the producers and the service providers. Well sites become the laboratories, and a recent report from the Standing Senate Committee on Energy, the Environment, and Natural Resources acknowledges that current measurement of R and D activity does not fully capture an estimated additional $1 billion spent annually by energy companies in their labs and in field experiments. Much of that activity is undertaken through collaborative efforts between service companies and the producers, because oil and gas wells do essentially become the testing grounds.

Earlier days saw producers spending a large amount of money on R and D internally or through academic institutions. This still occurs today, but so too do the ever-increasing efforts in R and D by PSAC member companies in their own labs and facilities as well as in the field on live wells. The technology behind the ever-increasing accuracy and real-time downhole data being provided to our customers is also supported through seismic data, an example of which is that when these two data sources—seismic and downhole readings—are combined and processed by geologists and petroleum engineers through computer simulation, you have a service that is as close to leading edge as you can get.

For instance, I am aware of at least five big screens housed by producers and PSAC member companies in their Calgary offices. Imagine a theatre-style arrangement where producers and PSAC member companies can witness three-dimensional and holographic imaging as technicians don special gear that allows them to virtually walk through a customer's formation 3,000 metres below the surface of the earth and position the drilling tools in the most optimal position for maximum production.

Once the well is designed, the drill bit can be steered from downtown Calgary offices by highly trained people skilled at directional drilling, with real-time downhole data communicated live to and from the rig in, for example, northeastern British Columbia. Directional drilling technology, in conjunction with other service technologies, continues to expand at a fast pace. The continuous buildup of computing power on downhole directional tools, as well as the expansion of sensor packages, is allowing us to develop real-time pictures of what is going on downhole.

The technology being provided to our customers today has significantly lowered surface environmental impact while increasing subsurface exposure to producing formations. The well site today can be home to multiple wells, drilled in relatively close proximity on surface, while reaching ever-increasing areas below the ground. The technology implemented to steer the bit into the optimal position, in conjunction with vastly improved real-time data readouts from downhole and seismicity recordings, allows for extremely accurate hydraulic fracturing stimulation and tracking in predetermined stages.

A third technological advancement I would like to point out today is with regard to wellbore integrity. The wells we are delivering to our customers today are thousands of meters below the surface, under layers of solid rock. Canadian service companies that cement these wells, like every other aspect of our industry, are highly regulated to standards that are—

[Technical difficulty--Editor]

[The Chair, Conservative, Leon Benoit]

We've lost you for the—

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

Our technology is obviously not as good.

[The Chair, Conservative, Leon Benoit]

Yes.

We've lost you, Mr. Salkeld, for the time being. We'll see if we can get you back online.

We've also lost Mr. Weis from the Pembina Institute, so I think we'll go to Mr. Cameron for now.

If you're ready, Mr. Cameron, we'll go to you for up to 10 minutes for your presentation from London, United Kingdom, from Climate Change Capital, on innovation in the energy sector. Please go ahead with your presentation for up to 10 minutes.

We have lost your sound too, so we'll have to wait and try to get that fixed.

Could you turn your microphone on, please?

[James Cameron]

How about that? Is that better?

[The Chair, Conservative, Leon Benoit]

That's great.

[James Cameron]

Okay.

[The Chair, Conservative, Leon Benoit]

You're on now. Go ahead, please.

[James Cameron]

Thank you very much, and thank you very much for inviting me to speak to your committee today.

My name is James Cameron, and I am the founder and chairman of an enterprise called Climate Change Capital. We are an asset management and advisory business focused on the climate change issue. We are now owned by a very large agribusiness, listed in New York, called Bunge, a Fortune 130 business that's a very substantial player in global commodity markets.

One of the things I do in my work is that I am part of the U.K. Prime Minister's Business Advisory Group, and my evidence to you today will be in some way couched in terms that would be similar to the advice I give that group. I want to make it plain that I am not a technologist, so I'm not in the position to give you good advice on this or that technology by way of comparison for your work, but I have seven points for you that I can make briefly, which I think you would find of assistance.

The first is that it's imperative to think of this problem as a system problem, not merely as a generation problem. The energy system needs to be thought of as a whole, and we get into trouble when we break it up into bits. Too much of our debate turns around one form of generation versus another. We don't think nearly enough about how the system could be defined, really quite radically, by the requirements of products that can be engineered in such a way that they have far less demand for power.

It's vital that in your thinking, even if it's just organizational, you look at generation. Please don't look at it separately from demand-side management, but don't even think of it in those traditional terms. If you think through how an intelligent grid might operate, why goods might be designed in order to meet tough energy efficiency standards, the energy service delivered to customers and citizens can be thought of in a very distinct way, rather than merely lining up alternatives for power generation. That's my first point, the absolute imperative of system thinking.

The second absolute imperative is that of climate change and the need to mitigate greenhouse gas emissions. Because that's an absolute priority and because it's extremely hard to do, it's important that you have means of measuring performance along the way to what are very difficult targets. It's important that in the innovation strategies you develop, you leave scope for things that we do not know today that will help us manage risks that we still don't fully understand. That level of uncertainty requires great care not to build into energy systems those technologies that ultimately will cause more economic and indeed social harm than the good they might deliver in the short term.

The third thing is to think in terms of the various devices any society has to encourage innovation and entrepreneurship independently of the energy sector. If a society can create companies easily, can shut down businesses that are ineffective, can register intellectual property with ease, can take advantage of a highly educated and skilled workforce, the chances are that there will be an innovative response to issues of major concern and importance.

It may well be that for many years we have taken energy for granted. We've been through a period of decades now in which energy has been relatively inexpensive, and huge advances have been made in the way we deliver energy to customers. I think a lot of customers have underestimated the technological input into providing that service. There is probably some public education required there to elevate the importance of energy and energy systems. On the other hand, people always feel the cost of energy when there is a small change in its price. My sense is that there is a huge capacity to innovate around energy.

However, one of the other aspects of a successful economy—innovating on any subject—is that it's a competitive economy, meaning that you have to have strict adherence to rules of competition and antitrust and you have to create space for new entrants. Many energy systems tend to get ossified around incumbents. It's extremely hard to move people who have been making investments for a long period of time and have great strength in the marketplace. It's very hard for new entrants to make their way, particularly if they have a disruptive technology.

One of the attributes of a successful, innovative energy system is that there is space for disruptive technologies to enter, and incumbents should be made very aware that they are at risk of losing their powerful position if a better, cheaper, more attractive technology makes its way into the energy mix.

The fourth point is that it's imperative to make a plan. There is a real opportunity to combine public policy initiatives that the market responds well to. Procurement can be a very useful strategy for organizing an innovative response, because you have a kind of volumetric demand that you can respond to. You know that there will be scope for your technology to enter a marketplace. It takes courage and it takes a decision that a government might find awkward to make, especially in the face of an incumbent, if we have a procurement strategy for certain megawatts of renewable energy, for example, we know has an effect on innovation. People can invest into that space.

Equally, we know that price signals work. Whether it's a price signal for carbon or a price signal for water, we know that those constraints, those strategies, allied to an opportunity to make money from delivering public policy, will work. Entrepreneurs rush to the opportunity to create value from delivering public policy.

The fifth point is that there is a huge reward in resource efficiency and energy conversion. In fact, if you look at the climate change problem in the same space as the energy problem, it's largely about conversion from primary energy into usable energy. That is a fantastic investment universe. It's a place where large amounts of capital can be deployed. It's not a small sandpit for environmentalists to play in; it's something that is extremely attractive to large-scale investors of all types.

However, it is a marketplace where there is considerable risk, so again, the availability of clear standards for products, for pricing mechanisms to reward delivery of public policy, and for competitive strategies that value resource efficiency as much as they value resource exploitation—that's the way for any economy to compete in the longer term, even if they are resource-rich. That provides opportunity for capital to flow into energy conversion.

The sixth point is just one from our own business. We have a private equity clean technology fund, which is largely focused on energy, water, and to some extent waste. Most of those investments are in small private entities in Europe that are growing, perhaps in the periphery of this energy world that you're looking at. They're in energy storage, in LED lighting, in solar PV manufacturing, in silicon waste from the solar energy. We're using that waste in order to improve the life-cycle efficiency of solar PV energy.

These investments tend to be in the bracket of €8 million to €20 million, and they're going into markets that are experiencing quite significant growth even after a very tricky last three-year period for all types of investments. The scale of opportunity for those kinds of investments remains very large. They are largely fuelled by risk-takers in the investment and entrepreneurial world. Private equity has had a difficult time in the last few years, but there is no prospect of growing an innovative economy without access to risk capital.

My final and seventh point, which really links back to the first and is a way of making sure that policy, finance, and technology are in close collaboration, is with regard to data. We have a huge capacity to create, manage, store, and distribute data. That system needs to be tuned to the needs of economies to provide energy in larger amounts to larger quantities of people.

Data systems that provide real-time information to allow large-scale consumers as well as individuals to manage their energy needs will have a profound effect on the systems we use in the future. We are very close to building big open data systems that will, I think, make a profound difference to the relationship between supply and demand in the energy system.

Put simply, with open data systems and with good data management, pretty much anybody can be a producer of energy. Pretty much anybody can play a part in the successful management of energy demand. Therefore, we have to build a system that enables many, many participants to build a more robust, stable, and secure energy system quite different from the one where there are a few large-scale suppliers in a push-power system where consumers are largely receiving passively.

That's a system that requires a lot of data, but we have the capacity to provide it.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Cameron, chairman of Climate Change Capital.

We'll go back now to Mr. Salkeld.

We'll complete your presentation, Mr. Salkeld. I apologize for the interruption. Technology is wonderful sometimes, and sometimes not quite as wonderful. Could you go ahead and proceed with your presentation, please?

[Mark Salkeld]

Thank you very much.

A third technological advancement I would like to point out today is with regard to wellbore integrity. The wells we are delivering to our customers today are thousands of meters below the surface of the earth, under layers of solid rock.

Like every other aspect of our industry, Canadian service companies that cement the wells are highly regulated to standards that are unquestionably world-leading. I am aware of at least two types of cement simulators used for pre-job planning. The software used closely simulates the events of a cementing job and, in particular, can calculate anticipated pumping pressures, pressures at the bottom or zone of interest, and casing burst and collapse pressure.

Simulators include sophisticated animation features that show the cementing job from beginning to end. The simulator works so well that on a recent deep intermediate cement job performed by one of our member companies, the actual recorded surface pump pressures seen on the job were almost identical to those predicted by the simulation.

There is a significant effort on the part of all PSAC members across the 17 subsectors they represent to adapt and implement the latest technology when it meets economic, competitive, and customer requirements. The technology being applied today has made significant advances not only for the protection of the environment but also for safe and efficient extraction of natural resources. The wells being drilled today are predominantly horizontal. PSAC has forecast that 70% of the 11,400 wells to be drilled in 2013 will be horizontal, and they are reaching unprecedented lengths.

Wells are taking longer to drill and are becoming far more complex. New technology is extending the typical season, because we are constructing permanent roads and locations that allow for activity well into the traditional breakup periods, the time when equipment moves out of field because ground conditions must either thaw or freeze up.

When heavy equipment is on location longer, it saves wear and tear on roads and local infrastructure, allowing for longer working periods, which boils down to steady work, consistent crews, employment security, and income security for the multitude of businesses reliant on oil and gas activity throughout the year, such as hotels, restaurants, and grocery stores. It is PSAC member companies that are established in communities throughout Canada—predominantly in the west—that contribute to local economies by way of school and sports team sponsorships, local businesses, and the improved quality of life.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you for your presentation, Mr. Salkeld, from the Petroleum Services Association of Canada.

For the final presentation today, we have Tim Weis, director of renewable energy and efficiency policy at the Pembina Institute.

Please go ahead with your presentation, Mr. Weis.

[Dr. Tim Weis, Director, Renewable Energy and Efficiency Policy, Pembina Institute]

Thanks for having me on. I appreciate the invitation to be here today.

I'm just going to quickly introduce the Pembina Institute so that you know who I am and the point of view I'm representing. We're a non-profit sustainable energy think tank. We're a non-partisan and independent group, and we focus specifically on sustainable energy development in Canada and how to reduce the impact of energy use on the environment and our ultimate well-being.

We were formed in Alberta, but we have offices across Canada, including in British Columbia, Ontario, and the Northwest Territories. The areas we focus on are climate change, renewable energy and energy efficiency, transportation, and oil sands development.

One of the things that is perhaps unique about how we work as a non-profit organization is that we're a hybrid organization that also does fee-for-service consulting at the same time. Many of our clients are actually companies in oil and gas development in Canada.

One of the things that perhaps makes our organization a bit unique is that we also do project work, and we work with communities, in particular on developing clean energy projects, so we have some experience on the ground.

That's an introduction to the institute and the background that I'm coming from.

What I want to specifically talk about today is renewable electricity. With the list of things that the committee is looking at, we could spend all day talking about these issues, but I want specifically to talk about renewable electricity, and then a specific subset within that.

We're seeing huge growth rates in renewable electricity. We've seen sustained growth rates of 30% per year in development around the world. Even right through the global recession, these types of growth rates continued. We're also starting to see countries targeting 100% renewable energy within our lifetime and within current investment decision timeframes. Scotland, for example, is targeting 100% renewable energy by 2020, Denmark by 2035, and Germany by 2040 or so. What that means is that decisions need to be made today in order to be able to achieve those targets.

This government has set an admirable goal, in my opinion, of achieving 90% of our electricity from non-emitting sources by the year 2020. That would put us on a good track. At this juncture, however, we're not on track to meet that target.

When it comes to renewable energy, especially renewable energy innovation, a question we often ask ourselves is how we rank against other jurisdictions, particularly other industrial countries. There are all sorts of reports out about this, and generally they conclude the same thing: that within our industrial peers, we're roughly in the middle of the pack when it comes to clean energy innovation and clean energy investment—by and large not a leader, but also not a laggard.

Canada all too often undersells the size of the country and undersells our importance in the world. Canada has the sixth-largest electricity system on the entire planet. We also have a huge opportunity to export to the United States. Our domestic electricity supply is the same as Germany's. I think all too often we undersell ourselves and think of ourselves as a small player; we're not.

That said, Canada generally also ranks within the top ten renewable energy developments globally, so we do have a significant market that is also creating jobs in Canada on the renewable energy side. One of the struggles, especially when it comes to innovation and investment, is that we have 13 different jurisdictions in Canada that energy companies have to deal with, and it's difficult to develop renewable energy in a coordinated way because we have ten provinces and three territories that have jurisdiction in this area.

One area the federal government could provide leadership in would be carbon pricing, which would help to create a stable market or a stable climate across the country.

I want to focus on one particular area. There are so many things I could talk about today, but there is one area that always gets forgotten. It's a very small subset that I want to talk about: remote communities in Canada, and the opportunity for renewable energy in remote communities.

We have over 300 remote communities in Canada, many of which rely on diesel power. Their fuel cost can be three or four times the price of heating fuel that you and I pay, and electricity prices can be up to ten times the price that you and I would pay.

There is significant difficulty getting diesel into these remote communities. It also represents money that is continually leaving those communities, which is a challenge to their long-term economic development.

What is particularly interesting about this area is that at one point in time, Canada really was a leader in developing renewable energy technologies for off-grid communities. Hydro Quebec was one of the early researchers in the area, and NRCan played a very important role in the early research that went on. There was leading research that went on in Prince Edward Island. There were early projects in northern Ontario, northern Quebec, and the Northwest Territories, and more recently in Newfoundland and Labrador.

Unfortunately, however, we have lost this lead and have lost it quickly, largely because we haven't been continuing with these types of investments and haven't been continuing to support this type of technology in Canada's remote communities. Australia and Alaska have really taken over the lead. In many cases, they have actually reverse-engineered Canadian technology.

Obviously it is important that those individual remote communities get renewable energy, but I think remote communities also offer unique innovation opportunities for renewable energy more broadly, not only in southern Canada but also around the world.

There are innovation opportunities within the technology itself. Obviously, operating in cold climates under unique operating conditions is difficult and requires new ways of thinking. There's also important innovation that needs to happen when it comes to integration of these technologies. For example, there are now wind energy projects operating in Antarctica that can operate at 60% wind energy, on average, so throughout the year, over half of their power is coming from the wind. What that means is that there are many times throughout the year when 100% of the power is being delivered by the wind.

These are engineering feats that I think were unheard of or were thought impossible at one time, but they are being done even in environments as harsh as Antarctica and Alaska.

Another important area remote communities offer, from a technological innovation standpoint, is the opportunity to innovate on power storage. There are opportunities in short-term storage, such as flywheels that help to integrate some of the ups and downs of renewable energy development. There is also long-term storage, such as batteries or pumped-in hydro. I think there are important areas remote communities offer to the rest of the country or the rest of the world.

As I said, we don't have to look any further than Alaska, which currently has over 20 off-grid wind-diesel systems operating. They are operating in harsh climates. They are operating, in many cases, out on remote islands. If Alaska is doing it on this scale, there is no reason we can't be doing it here in Canada on that same scale.

With respect to remote communities, one other important point is that this is a federal jurisdiction. It is important for the federal government to play a leading role here, not only because it is a federal jurisdiction but to provide that coordinated approach across all the different provinces and territories that have remote communities that currently rely on diesel and are looking for more sustainable opportunities.

This would provide an important area for Canadian expertise to regain the leadership we once had. I think we need to be cognizant of the point I made earlier, which is that we have a sizable domestic market here where we can prove this technology out. We can make important innovations. There is really a massive global opportunity to be exporting this type of power. There are all sorts of islands around the world that are off-grid. There are many communities that are rural electrification opportunities.

There are also mines. Mining operations are a key area. As an example of what is being done in this country, the Diavik mine recently put up wind turbines in the Northwest Territories.

I would like to sum up by suggesting that this is one key area, albeit a small area, that Canada all too often forgets about, and it is an important area. We can be renewable energy leaders and innovators.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you for your presentation, Mr. Weis. Mr. Weis is a renewable energy and efficiency policy director from the Pembina Institute.

So far in this study on innovation in the energy sector, we've heard from the Department of Natural Resources. That was at our first meeting. Now we're getting a good overview from many in the innovation business in the energy sector today. We will expand on that through questions and comments from members.

We will start with Mr. Allen, for up to seven minutes.

Go ahead, please, sir.