Natural Resources Committee on May 1st, 2014

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Do you have the potential for hydroelectricity?

[Vitalii Dem'ianiuk]

Yes, but this potential is not so high, because the current hydro power generation is quite developed in Ukraine, and in the sector where we can work, this is small-scale hydro generation.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

In terms of biomass, you said you have all the contacts in Ukraine. However, in your view, how could Canada make this sharing of expertise happen? Could that be done through a government mission, for instance? We realize there is a potential and that it would be possible to do something, but a plan needs to be set up.

[Vitalii Dem'ianiuk]

As I said, I am ready to introduce you and to introduce Ukrainian non-government organizations in the biomass sector so you'll see them. For the current moment, the Ukrainian non-government organizations work closely with the government, the central government, and, what is especially important, with the local regional governments, because the best way is to go to the regions and to start to work with the particular projects.

Did I answer the question?

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Yes.

Could other witnesses comment on the way we could apply this help in the most effective way?

[The Chair, Conservative, Leon Benoit]

Mr. Edwards.

[Michael Edwards]

Thank you.

Perhaps another way of answering your question is, how do we actually stimulate a market for energy efficiency, energy conservation? To go to back to a comment that was made on the other side, it seems that the most effective way of getting energy efficiency off the ground is to send a price signal through the market.

It's going to be very difficult if people are trying to do an internal return on the investment when they're getting their gas at 15% or 20% of the cost of production. That is a problem. There are market reforms that need to happen before you can go off with private companies that are trying to do business on a commercial basis in a market that is dysfunctional.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Moore.

We go now to Mr. Calkins, followed by Ms. Leslie, and Ms. Block.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I'm just going to ask all of my questions of all of the various witnesses right up front and hopefully there will be enough time during the remainder for them to be answered.

My question for Mr. Edwards is based on the regulatory environment. We haven't spent a whole lot of time talking about Canadian expertise when it comes to the regulatory environment. Canadian companies, while they sometimes complain they're frustrated with the Canadian federal and provincial regulatory environments, will say that the certainty and predictability of these regulatory environments is the best in the world, insofar as being able to allow them to operate. I'm wondering, Mr. Edwards, if you can talk about what Canada could do insofar as offering regulatory expertise is concerned.

My question for Mr. Hill is about his comments about the required pace of infrastructure construction versus the current pace of infrastructure construction when it comes to the infrastructure deficit insofar as our exporting capabilities are concerned. If the current situation in Ukraine isn't enough to prompt us to get the current pace up to the required pace, what conditions would need to change in order to get us there? If a soft invasion of eastern Europe from Russia is not enough, what would be the conditions required?

For Mr. Dem'ianiuk and Mr. Aslund, I have a question that's geopolitical in nature. I firmly believe that Russia has their eyes squarely fixed on the Transnistria and Odessa region which would effectively cut Ukraine off from the Black Sea. If they were able to get these territories within their control beyond what they already have, I'm just wondering what the impact of that control would be on the continental European energy scene.

[The Chair, Conservative, Leon Benoit]

Mr. Edwards, we have only about three minutes for all these answers, so please go ahead, sir.

[Michael Edwards]

Very quickly, yes we do. The practitioners are within the NEB. They're within the offshore boards. In fact, when Australia was working on a new regulatory regime, they went around the world looking for best practices. They modelled their offshore regulatory environment off ours to some extent. Certainly within those three organizations and notwithstanding that, I suspect that even within government there is both policy and regulatory expertise that could be applied here, if it was asked for.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Hill.

[Dr. Geoff Hill]

On the required pace versus the current pace, if you look at the economic activity currently in the oil and gas industry and how it's throttled back as a result of lack of market access, if you look at the very short window we have to compete with global LNG projects and the window is closing, if you look at all the economic potential we're missing right now and then you add into the situation what's happening in Ukraine and what will happen elsewhere, I'm actually not sure what else is required for us to increase the pace. Those are unbelievably compelling reasons.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Fair enough.

[The Chair, Conservative, Leon Benoit]

Your last question was for whom?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

My last question was for Mr. Aslund and Mr. Dem'ianiuk. It was a geographical question regarding Transnistria and Odessa and the potential cutoff of Ukraine from the Black Sea.

[The Chair, Conservative, Leon Benoit]

Mr. Dem'ianiuk, would you go first, please.

[Vitalii Dem'ianiuk]

From my perspective, the destabilization of the situation in any region of Ukraine, what Russia is trying to do for the current moment, will have on the next step a huge impact on the stability in Europe especially in energy stability. But from my perspective, the situation in the south of Ukraine is much more stable than in the east and the Government of Ukraine will keep this situation.

[The Chair, Conservative, Leon Benoit]

Mr. Aslund, would you make a short addition to that answer.

[Anders Aslund]

Yes, on Transnistria, I was there one and a half years ago. It's of course a nasty dictatorship. Russia had a referendum there in 2006 for annexation to Russia with 96% majority. It doesn't mean anything. It's a pure dictatorship. President Putin has all the legal pre-conditions and he can decide tomorrow that he wants to annex Transnistria, and that would of course greatly complicate the situation. It's true that there's little popular support in southern Ukraine for Russian action, but there is no military capability to stand up against Russia. Concretely this means you can't really rely on putting an LNG terminal in Mykolaiv or Odessa in this situation.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins.

Thank you all for your very concise answers.

Ms. Leslie, go ahead, please, for up to five minutes.

[Megan Leslie, NDP, Halifax, NS]

Thanks to all the witnesses.

I'm going to start with a question for Mr. Hill and then open it up to everyone, if there's time.

There's going to be a bit of a long preamble, because I'm really excited about this discussion on energy efficiency. I'm partly excited about it because in my province of Nova Scotia we have Efficiency Nova Scotia, which is Canada's only independent energy efficiency utility, and it's a best practice nationwide. We have developed significant expertise on energy efficiency, but when we started we had to rely on other jurisdictions that had that expertise, like Vermont. We did a lot of work with Efficiency Vermont, but we have been able to develop national best practices.

So we hear about the amount of time and planning and cost and infrastructure that it would take before we could actually export natural gas to Ukraine, and I think about Efficiency Nova Scotia. It had an incredibly short ramp-up time. Basically, the utility and review board recognized that it was cheaper to produce a unit of efficiency than it was to produce a unit of energy. It put the mechanisms in place to create this organization—I was a part of creating it—and, boom, it was off to the races.

I hear concerns that Ukraine can't implement anything very quickly because there's no infrastructure in place, but energy efficiency actually prevents the need to build physical infrastructure. I'm seeing nods, and that reassures me. Actually energy efficiency optimizes the infrastructure that's already there.

The other thing I'm hearing about is price impacts, questions about price impacts in Ukraine. But if you have an energy efficiency program that targets, for example, low-income Ukrainians who don't have room in their budget to absorb those higher energy costs, you could actually design the programs to assist those low-income Ukrainians, or you can target householders. You can get to where people are really feeling that pinch.

I'll start with Mr. Hill, just because I know you have called for a national energy strategy that includes energy efficiency, but in your writings you have targeted large emitters, industry. I wonder if you have anything to add about the broader impact or implementation of energy efficiency.

Then if there's time, maybe Mr. Edwards could respond.

[Dr. Geoff Hill]

Thank you for the question. Your preamble was excellent, and I agree with you fully.

[Megan Leslie, NDP, Halifax, NS]

Thank you.

[Dr. Geoff Hill]

One of the reasons we would target the large emitters first is perhaps to set the tone, and also you probably have a better chance of making a substantial impact in a shorter period of time with some of the large emitters than you do with all of the individual emitters. That is not to say they shouldn't go hand in hand, but the chance of an individual retrofitting a furnace, as an example, is a lot less than it is for one or two albeit substantially large investments in some of the bigger power plants. Our structure, whether it's regulated, or non-regulated, as some of our provinces are currently, of the income for our power and utilities companies hasn't really fostered the environment for them to be more efficient, and now it has. This is forcing them to think a bit more and to actually be more proactive and be more energy efficient.

I would say that, if you had a 60-40 split, you could probably focus 60% immediately on some of the large emitters, with a long-term approach on the 40%, the small emitters, if I were to pick a number.