Thank you, Mr. Chairman. I would like to apologize to the members for being a little late. I was ushered to the third floor, to another committee room, and halfway through my presentation we figured out it was the wrong one.
I head up a group called Corporate Knights. We have a media investment and advocacy wing. The advocacy wing is called the Council for Clean Capitalism, and its comprised of the CEOs of nine major Canadian corporations, including Interface, Mountain Equipment Co-op, Teck Resources, SunLife Financial, TELUS, Vancity, and Catalyst Paper.
Together our members employ over 200,000 people, generate $50 billion of revenue, and control over half a trillion dollars of assets under management.
Today I'm going to talk about market diversification in the context of our abundant energy resources, a topic that lands square in the middle of our country's biggest economic opportunity of the century.
I'd like to start by considering what would happen if a Martian were to look down on our great continent today. What would he see? He would see a land rich in oil and gas bounty, and even richer, especially in the north, in fast-flowing water and fast-flowing wind. He would see that the north part of North America, Canada, has most of the clean and fossil energy potential on the continent, and the south part of North America, the U.S., consumes 90% of the energy, which makes sense because their economy and population is about 10 times larger than Canada's. If he examined trade patterns, he would see most of the energy flows north to south, and that while Canada provides the U.S. with 28% of its oil needs, it only provides 1% of its electricity needs.
If he looked at our national accounts, he might be perplexed to see how we could be running provincial and federal deficits in the middle of harvesting the fruits of an asset that took a billion years to forge.
If he looked at greenhouse gas emissions, he would note that the epicentre of Canada's burgeoning fossil fuel extraction, the oil sands, is responsible for about 50 million tonnes of annual greenhouse gas emissions, or about one-twentieth of the two billion tonnes that the U.S. coal-fired electricity plants belch out each year. And yet if he were to read the newspapers, he would note the energy conversation between business, government, and civil society is near monopolized by the narrow question of pipeline or no pipeline, how much Canada's economy needs more oil pipelines and how bad this is or will be for the environment. It's the old jobs versus the environment debate. It's bad for the environment because the pipeline will abet carbon-intensive oil sands. They will require loads of natural gas to steam out the oil, even though tapping a tiny fraction of the 11,000 megawatts of hydro potential lying fallow in northern Alberta would make the in situ oil sands close to a zero carbon operation.
At this point, the Martian might start wondering, given that Canada has economic clean electricity assets that far exceed their fossil fuel assets, why are the Canadians selling the Americans 28 times more of the oil needs than electricity needs? And why are the Canadians spending so much effort trying to sell the Americans their dirty oil and so little trying to sell their clean electricity? The main part of the answer to the first question is that we have a lot more pipelines than we do power lines. Most of our best clean electricity assets are stranded away from their potential customers. As far as I can see, there's no good answer to the second question beyond inertia, although one might note that the Canadian Hydropower Association seems to have about one employee for every 20 at the Canadian Association of Petroleum Producers.
The bigger issue is that the natural energy question is being tackled in an adversarial clean versus dirty energy kind of way. That is most unfortunate for both the environment and our energy-driven economy. What if we consider how clean and dirty, or conventional, if you prefer, energy can go together in a way where the sum is much greater than the parts? For example, imagine if Canada's oil sands were powered by hydropower, green power, by the high voltage backbone vision for Alberta that the ATCO group is calling for. Instead of being among the dirtiest, it would be among the cleanest forms of oil in the world, almost green from an extraction perspective.
Imagine if instead of fighting for pipeline corridors we were putting forward energy corridors, co-locating pipelines and superconductor electricity power lines that can fit in the same existing right of way. This is an idea that the Electric Power Research Institute, EPRI, has commended for investigation. There's no economic reason, and there's no engineering reason, why we could not be exporting clean and conventional energy to the Americans supported by these co-located corridors, which would double—this is important—our overall energy exports, including electricity and hydrocarbon, and cut in half U.S. greenhouse gas emissions from coal plants. It would be pretty hard to oppose this on environmental grounds or economic grounds.
We also happen to have companies with prowess in power lines and pipelines, from Enbridge and TransCanada to Brookfield, as well as large investors with an appetite for big infrastructure plays, from CPPIB, to OMERS, to BCIMC and La Caisse.
A wise Canadian energy strategy is one place where oil, water, and wind mix quite well. Instead, we put most of our eggs in the basket of natural gas-fired oil sands. The world has changed a lot since we made that bet. Thousands of people are circling the White House protesting against us, and indigenous groups are digging in their heels delaying pipelines. The U.S. has found out that it may not need as much of our oil as they thought, with massive discoveries aided by the new tight oil technology. In fact, by 2020, the International Energy Agency estimates that the U.S. will be a net oil exporter. Make no mistake, there is still a lot of prosperity to squeeze from the oil sands and our American customers, but it's not going to be as easy, or as prosperous, or as juicy as we thought.
Staring us in the face at this moment is a major economic opportunity to double energy exports by joining up at the hip our clean and conventional export strategy. What is stopping us from building these energy corridors and co-locating pipelines and power lines? One part is that we don't currently have a national answer to the engineering question—not the political question, the engineering question—of how much clean electricity we actually have in this country.
Assuming an optimally designed electricity grid, what would our electricity export potential to the U.S. be on a province-by-province basis? A public clean energy superpower map undertaken by the National Energy Board, delineating Canada's wind, solar, tidal, pump storage—crucially pump storage—and geothermal potential, would help delineate where to plan national interest electricity grid corridors and would be catalytic for the private sector to enter into this fray.
We also have to overcome the idea of electricity exports being some kind of zero-sum game between provinces. It's not. If we recognize the magnitude of the opportunity that exists, we will reframe the nature of the barriers. The convening power and leadership of the federal government could go a long way to helping Canadian provinces see how little our current slice of the U.S. electricity market is and the potential for an electricity export pie that is ten times bigger—ten times bigger—than today.
Instead of fighting over crumbs, a pan-Canadian, east-west, north-south grid co-located with pipeline energy corridors with multiple north-south shoots is a means to enhancing access to U.S. electricity markets, not a limiting factor.
The 21st-century energy corridors will require transcending historical cleavages and reframing the notion of an east-west grid in the context of a pan-Canadian enabler to supply the vast U.S. electricity market. The convening power and leadership from the federal government will be essential in this regard.
Other issues include an abundance of red tape and the high cost of capital. Both of these issues have held up the expansion of power lines. However, the lemonade from the lemon of recent changes to federal environmental regulations is that there is now much less red tape standing in the way of building major infrastructure projects. But there's still much to do. I would recommend that the committee take note of the German electricity network development plan, the U.S. Energy Policy Act of 2005, which has a provision to invoke national interest electric transmission corridors, and the Canadian Electricity Association's recommendations to plug the infrastructure gap by removing interjurisdictional trade barriers to electricity, removing regulatory impediments to much-needed electric infrastructure investments, and enhancing the efficiency of permitting procedures for international power line projects.
This should be a major focus of our foreign policy. On the capital side, the current Prime Minister has made a substantial contribution already by providing loan guarantees to Newfoundland's government to support the construction of a $6.2 billion lower Churchill hydroelectric project and underwater power cable to Nova Scotia, which is a gateway to U.S markets. This loan guarantee will save Newfoundland $1 billion in borrowing cost. The Prime Minister said that similar financial support will be considered for projects that meet three criteria: be of national or regional importance, have economic and financial merit, and significantly reduce greenhouse gas emissions.
A fourth criterion I would like to suggest could be to link these guarantees to the availability and to the implementation of national interest electricity corridors. This would be a tempting carrot to bring provinces on side. As well, repeating this pledge with explicit comment that the federal loan guarantee would also be open to private sector transmission projects would help galvanize private sector interest.
A map to inspire transmission runway, cleared of red tape, and a little credit enhancement would help us marry up clear and conventional energy and deliver the prize of economic prosperity for generations to come.
Thank you kindly.