Natural Resources Committee on March 7th, 2013

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

As that matures, will it change?

[Céline Bak]

Things will evolve over time. However, I'd like to note that our ability to incubate companies in Canada is quite strong. Our ability to integrate those companies into our economy is still to be developed.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Another thing you said earlier caught my attention. A couple of us sat on the international trade committee when it debated the Panama-Canada treaty, so we're somewhat familiar with it.

What other markets out there are of particular interest to your segment? Where else would Canadian trade deals be of use? We're doing one with the EU right now. I suspect that might be it. Where in the trade agenda could government policy be useful to your industry?

[Céline Bak]

I'll speak about renewable energy just because Panama is an example of that. Canada has a real niche in small-scale hydroelectricity and small-scale wind, as an example. Panama has actually a number of hydroelectricity projects that haven't been developed because they require changing the course of rivers. We have technology that doesn't require that and works in a very complementary way with aboriginal communities in Panama.

The Caribbean is obviously a place where energy is very expensive. Again, we have some very nice, globally competitive technologies that would be relevant there as well.

Eastern Europe offers other opportunities. There's a lot of infrastructure that needs to be built there. As we build our relationship with the EU—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Trade deals with the Caribbean, Eastern Europe, and smaller countries in Latin America would all be—

[Céline Bak]

I haven't spoken about Asia. In Japan, everybody's talking about VIP, Vietnam, Indonesia, and the Philippines. We need to actually engage with the Asian Development Bank and have a say at that table.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Basically, trade agreements and free trade around the world would be useful to your sector.

[Céline Bak]

Yes, if we actually combine that with engagement with the international financial institutions, to which we lend money in a very responsible and regular way.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go next to Mr. Nicholls, but Mr. Cleary will be taking the first question.

Go ahead, please.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you, Mr. Chair.

Thank you to the witnesses. I just have one question.

I was in Israel last summer, and I went for a tour of the country. I also toured a Toyota plant, and I test drove an electric car, a Toyota car. It was fascinating. It's hard to tell that the engine's on when the engine's on, if it is an engine, I suppose.

At any rate, one thing that is happening in Israel with the technology is that they're actually building a string of stations across Israel. When you stop, you don't recharge the battery, you change the battery. When you buy the car, you lease the battery, more or less, over the lifespan of this vehicle.

I realize that the weather is a lot different in Canada than in Israel in terms of the amount of sunshine, but where is that technology here in this country versus Israel? Are we close at all in terms of this electric technology?

[Andrew Morin]

In terms of the vehicle, Toyota is planning to manufacture, and they might have started it already, the RAV4 electric vehicle in Woodstock, Ontario.

The problem you have with the deployment of pure electrics in particular—I'm not talking about the hybrid or the dual-fuel solutions, such as the Chevy Volt or some others—is that it's hard to break range anxiety when you don't have in place the infrastructure charging stations, etc., be they the Better Place model or the Israeli model that you spoke of.

You also need a critical mass. I mean, it might not make economic sense to string these charging stations all across the Prairies, where they have a more limited population, let's say in the northern parts of Manitoba or Saskatchewan, but certainly in the Quebec-Windsor corridor that would probably make sense, and in provinces like British Columbia. Quebec is already into that, to some extent, and they're moving quicker, given that they produce power to a large extent in the province.

Without arguing for one technology over another, because I do represent all the auto companies with different approaches, I would say that whether it's new fuels or whether it's electricity, the infrastructure has to be there to support it.

I'm certainly not here to ask for any incentive or handout from the government for that, but certainly governments—plural—be they federal or provincial, do have a role to play in that, along with industry.

How do we get there? I think that's a question the policy-makers need to decide. There probably will be some dollars and cents behind it. That will have to be discussed at some point.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you.

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

I'm feeling very generous with my time, Mr. Chair. I'll pass the rest of my time to Mr. Gravelle.

[The Chair, Conservative, Leon Benoit]

Go ahead, please, Mr. Gravelle.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

Thank you to all of the witnesses.

Mr. Dick, in your presentation you talked about Seacliff Energy in Ontario. Can you tell me where it is in Ontario?

[Dennis Dick]

It's in Leamington, Ontario, close to Point Pelee, which is at the southernmost mainland tip of Canada in southwestern Ontario.

[Claude Gravelle, NDP, Nickel Belt, ON]

All right.

When you answered your first question, you said that aggressive feed-in tariff rates and premiums have driven the uptake of technology in Europe. Can you explain that? Can you comment on why it would have done that in Europe and not in Canada?

[Dennis Dick]

The feed-in tariff rates are much higher in Europe. In Germany the rate works out to about 20¢ Canadian for a kilowatt hour. In Canada, for a one-megawatt plant, it's about 14.7¢, and in the U.K. it's upwards of 28¢.

That feed-in tariff rate price drives the financial investment. Lenders are able to lend and producers are able to make money to get a return on investment.

As well, the German government, like governments in other parts of Europe, has recognized the value of their renewable energy and the organic waste solutions combined together. Their policy is that they believe in this industry as a way to solve some of their problems.

[Claude Gravelle, NDP, Nickel Belt, ON]

One of the comments you make is that biogas plants are located on dairy farms for obvious reasons. How would an ordinary farmer go about paying for one of these plants, and how much would it cost?

[Dennis Dick]

It would cost about $8,000 a kilowatt. We did a study at the Biogas Association, an Ontario association of biogas owners, which surveyed a number of existing biogas plants. A farmer would need a certain number of cattle, probably about 500 head, to make it viable. You would use the money generated through electricity production from the manure process through the digester and bring in some off-farm organics, but it's very difficult in Ontario to make those numbers work.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Gravelle.

We will go now to Mr. Allen for up to five minutes.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

Thank you to our witnesses for being here.

Ms. Bak, I'd like to start with you, please. I'm going to pick up where Mr. Trost left off.

I'm not going to put words in your mouth, but I think I heard you say “a CMHC for technical risk”, and you also talked about bidding into these foreign markets and winning. I want to get some clarity around what you mean by “technical risk”. Typically I see technical risk as technology, if you will, or whatnot, as opposed to some other risk in the area, so if you're bidding on these projects and winning, are you bidding proven technologies in these foreign markets? What does “technical risk” then mean if you're bidding proven technology?

[Céline Bak]

That's a very helpful question.

Bankers will look at a project in terms of different elements of the project. If you're working on renewable energy, for example, you need to have an agreement in place for your municipal waste if you're going to do waste to energy, so you need tipping fee agreements and things like that, and you need an off-take agreement, someone who will take the electricity.

If the technology has not been in place and doesn't have, let's say, two years of operating data, they will see that as being a technical risk. It may be that the technology is proven in the sense that it has been operating for a year or something like that, but banks take no risk technically.

It depends on how our government decides to proceed, but if, for example, under the negotiations for the next approach on climate change we decided to participate in that, the technologies that Canada has will generally be viewed as having technical risk even though they are deployed at some level. This means that the next round of climate-related technologies could all be from China because there is no technical risk associated with five megawatt turbines, wind turbines, and Chinese-produced solar panels. We need to think about what we're going to do, if we want some of the more novel technologies deployed.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

In essence when you're bidding on these projects, the countries you are bidding in don't put a square around the technology and whether it's proven or not. They are entertaining everything. Is that true?

[Céline Bak]

That's right. As an example, Panama would be in-river hydroelectricity, but if you have not proven in-river hydroelectricity, it has technical risks.