Thank you, Brent.
Mr. Chairman, for the record, the long title is actually two different parts of my title. I am here as a member of the board of directors of QUEST.
For your reference, we've handed out copies of a deck. Brent has talked about QUEST in the context of communities more broadly. I'm going to talk about energy innovation.
Something that I'm sure is familiar to all of you is that energy is a long game, and so is energy innovation. Energy's built on long-lived infrastructure and involves natural resource development, inescapably. All of those involve investments that last for a long time. We're living today on energy infrastructure that was built 50 years ago. We will be using energy infrastructure 100 years from now that we're building today. In fact, our energy-using communities are even longer-lived.
Energy technology has evolved slowly but surely. A good example is the incremental improvements to internal combustion engines. Notwithstanding predictions to the contrary, internal combustion engines will continue a long way into the future, albeit in high-efficiency, hybrid applications. Other technologies have come up to the line, but have not been as successful. Small changes eventually add up to very big changes in environmental performance. Occasionally, we get surprises. Hydraulic fracturing has completely unhinged our expectations with respect to natural gas and increasingly with oil.
My point here is simply that none of us is very good at predicting the kinds of changes that might be coming along, and that includes government policy-makers. I think that says something about the way you need to approach energy innovation. Above all, we must remember that reliability and cost are critical. Big leaps that ignore those issues will lead to big surprises, and not very pleasant ones. Finally, public acceptance is fundamental. If we don't have the public with us, the best ideas in the world will go nowhere.
QUEST argues that innovation is about getting the institutional and policy environment right, after which the innovation will follow. I'm going to talk about two different things: policy principles that we need to guide the process, and some technical principles based on what we think is the right kind of engineering for energy in our communities.
With respect to the policy principles, a lot of these go into community design, or at least some of them do. I won't talk about all of them, but let me just flag a few.
It starts with price signals. That means avoiding subsidies, and it means thinking seriously about how you price carbon. It means managing risks and being flexible. You need to maintain technology and fuel diversity. You need to emphasize performance and outcomes in policy, as opposed to prescriptive approaches. Finally, policy should be stable, because investors need that stability.
Then there are the technical principles. The basic point here is that if we get the institutional and regulatory and policy environment right, investors are going to follow it, and they're going to follow it in this order. Small changes are what make sense. It starts with reducing your energy use, and it goes on from there. We need to use the grids strategically. Basically, we have the gas grid, the power grid, and increasingly a thermal grid. These need to interact, and they need to interact so as to bring in a whole variety of technologies that will improve the performance of our energy systems.
Integrated community energy systems are part of a long and growing list of innovations from across the country. Brent mentioned at the outset that this is happening, that serious organizations are engaged in this. That includes serious investors and communities putting these kinds of systems in place. We believe these will grow.
In remote northern Canada, we're increasingly starting to work. Here there isn't the big energy prize that there is in urban Canada, but there is a big prize for the people who live in those communities. There is a big opportunity to reduce the costs of sustaining energy systems in those communities, and there are all sorts of ancillary benefits, such as health benefits, that go with that.
I think this needs to be an increasing focus for what we do on energy innovation in Canada. We are, after all, a northern, resource-based country.
Let me wrap up with the last slide. It enumerates several areas of federal policy interest. I won't go through all of them all in detail. They're there and undoubtedly are familiar to you as committee members.
Let me just speak briefly to the first one: federal policy and organizational support. The amounts of money are small, but for an organization such as QUEST, they are absolutely critical. We receive project funding from Natural Resources Canada in the order of $70,000 or $75,000 a year.
We leverage that 10 times with contributions from private sector companies, foundations, and provincial governments. Part of the reason that turns into leverage is the fact that the federal government is taking this seriously, which is a signal to everyone else that this matters. Federal leadership is the critical starting point for this sort of thing.
Mr. Chairman, I'll leave it at that. Thank you very much for your time.