Natural Resources Committee on Nov. 22nd, 2012

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Only if you wanted to transport it in the liquid form. Is that right?

[Glen Schmidt]

More likely.... Notwithstanding that it's a heavy oil, it retains a liquid form. It's not a solid at surface.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

So it's not going to re-solidify? That's really handy to know.

The diluents you are using right now are extracted primarily out of the natural gas streams and sources we have in Alberta, through the mid-stream processors and so on. As far as innovation goes on that front, how much further can we go?

[Glen Schmidt]

Are you referring to the...?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I'm talking about the diluents. We know the chemical compositions. Is there much more that we can do from that perspective to make the process easier? How far are we down the path of knowing...? In pumping butane or anything else downhole, with the heat for enhanced recovery, where are we in the process of knowing the impacts?

[Glen Schmidt]

There are different companies that are already commercial. Esso at Cold Lake has a project called LASER—liquid addition to steam to enhance recovery. It's commercial. At the University of Calgary, we chair a consortium of 16 companies to address the questions you just asked. What are the fundamental issues in mixing light hydrocarbons and oils? How do we describe it mathematically? We're at a reasonably advanced stage, but to answer your question, it's what we can see today—there is always more tomorrow.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

How much time do I have left, Chair?

[The Chair, Conservative, Leon Benoit]

You have two and a half minutes.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you very much.

I'm going to talk to my friends in the solar industry just for a second.

I represent the riding of Wetaskiwin, so I'm fairly familiar with what's happening on the biodigestion side. I don't mean to leave Mr. Chrapko out of this. I'll let my other colleagues pursue some questioning there.

I'm excited about the solar opportunities we have, particularly in Alberta. I have constituents who live in a large rural area. Mr. Anderson alluded to the fact that we have people who now have to make choices on whether they are going to go on grid or stay off the grid. The price point on getting a completely off-grid solar solution for a home, a small farm, or a small business operation in a remote rural area is getting to the point where it's almost economically feasible to do that.

I'm just curious. How much more can we expect the economics of solar to come down and make it more affordable? We have power companies in Alberta, like ENMAX, that are offering solar solutions for individuals who could become more self-sufficient with it, helping on the investment side, because the price point or the entry point into the market is so high. How much cheaper can it get?

[The Chair, Conservative, Leon Benoit]

We need another 30-second answer, please, Mr. MacLellan.

[Ian MacLellan]

First of all, read the white paper we are coming out with next month. We have a very detailed graph, but if you take a look at where the experience curve ends and how it's coming down in price, and you extrapolate the growth of solar, if solar were to power the entire planet over the next number of years, where would we go in terms of the price? Well, the price would be at 35¢ per watt, installed. That's where we're going, which is about an order of magnitude less costly than it is now. What will happen is that solar will become the lowest-cost form of energy on the planet. That's because we're powered by silicon, which makes up 25.7% of the earth's crust.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. MacLellan.

Thank you, Mr. Calkins.

We go now to Ms. Liu. You have up to seven minutes either for you or for your colleagues.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you.

Thanks to our witnesses for coming by.

You mentioned a white paper will be coming out next month. If you could table it the committee, that would appreciated. I think it would benefit our study.

You touched on how important research and development are to the development of our solar industry. It is an industry that's in constant development, and it's one that's very dependent on innovation. We know that in the last budget recently the government has cut funding to certain research councils, and I'm thinking particularly of NSERC. As well, they have cut the SR and ED tax credit. I am wondering if you know of any projects relative to solar energy that will be affected by these cuts. Can you explain in more detail the importance of federal support for R and D for solar energy?

[Ian MacLellan]

Canada has three real gems: SDTC, NSERC, and Canmet. I've had in-depth involvement with all three organizations over the years. I believe that innovation is the core competency of Canada. We can't necessarily compete with cheap manufacturing, so we have to be innovative.

We talked earlier about how the costs are going to come down by, say, another order of magnitude over the next several decades. We know technically how to do that, but it's going to require a tremendous amount of innovation, so strategically it's a huge mistake to be cutting funding in the fastest growing-energy industry on the planet, which is creating more jobs faster than any other energy industry.

Canada is already substantially behind in the deployment of the technology. We've had a lot of excitement in Ontario over the last couple of years because of that, but innovation is profoundly important to this, and the returns are quite substantial. This is what we've seen in Europe. It was mentioned that $125,000 per job.... We went through the math with the German government. In three years, they got their money back in terms of spin-offs and a whole bunch of other stuff. Innovation I think is key.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thanks.

I was also reading with great interest your recommendations for the pre-budget consultations of 2012. Actually, you came out with three recommendations that you didn't mention this afternoon. I wonder if you could touch on those recommendations that you presented before the finance committee.

[John Gorman]

I'm sorry, Ms. Liu. I don't have those recommendations in front of me right now.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Would you mind tabling them with the committee?

[John Gorman]

We will table them.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thanks.

In our last committee meeting, we spoke a lot about the United States. We've also spoken about it today. We know that the United States is the main direct competitor of Canada for investments in solar energy. You talked about the two things that the United States has done that Canada could learn from. You talked about the availability of tax credits, as well as building codes and environmental standards. Could you elaborate on the fiscal measures that we could use here in Canada to stimulate investment?

[John Gorman]

Yes. Thank you.

I could put that into context as well, because one of the earlier questions was about Canada lagging behind other nations in terms of solar. Bringing up the United States, North America as a whole is playing catch-up right now. That being said, North America is making rapid progress. Ontario is the fourth-largest jurisdiction for solar in North America right now. We have created very significant momentum and expertise. That includes the research that's being done by academics all over the country right now as a result of the fact that we have a promising market here that's growing very quickly.

Whether you are a fan or a critic of the type of program they've introduced in Ontario to start this growth, the fact is that there are many other ways, such as the tax credits and rapid amortization of capital equipment, etc., to incent and get solar going. I'm thinking in particular now of the Alberta market, which has announced that it's introducing a renewable energy framework. We just came back from getting an absolutely incredible reception from the government decision-makers there. There's a great deal of excitement about how to deal with solar, and it's going to be a made-in-Alberta solution.

It'll look nothing like a FIT program, no doubt. It might use some of these other mechanisms we're talking about, but the beauty of this is that you can use this variety of different mechanisms. When Mr. Calkins was talking about the fact that some of the places in Alberta now can install solar almost at cost parity with other more traditional technologies, that's true. It's true because Alberta and Saskatchewan have the best solar resources in the country, and that means you can produce more from what you put down.

As someone who's running the trade association representing these companies across Canada, what keeps me awake at night is the idea that the momentum we now have in Ontario is not going to spread quickly enough through the other provinces to be able to catch up to the other nations and keep us competitive globally. I think that's where the federal government has to show some leadership and some direction in terms of getting the other provinces to take advantage of the momentum we have—

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

I'm sorry to cut you off. I'm going to give my last minute to Mr. Nicholls.

[The Chair, Conservative, Leon Benoit]

You have about half a minute.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Schmidt, innovation is the idea of improving an existing market need in a new way and the creation of new value through solutions that meet new market needs in new ways. There's nothing new about shale extraction; it has been around since the 1920s. Laricina's idea doesn't sound particularly new to me either. In the 1970s, the Illinois Institute of Technology was working on this idea, so it has been in the works for about 40 years.

My question is more specific to the electrical demand of your process versus, say, the geothermic fuel cells process of shale extraction that uses waste heat. Do you have figures comparing your process and the geothermic fuel cells process?

[Glen Schmidt]

No, I do not.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Okay.

How would you compare your process with the geothermic fuel cells process?