Natural Resources Committee on May 5th, 2015

[The Chair, Conservative, Leon Benoit]

Thank you.

We go now to Mr. Rafferty, followed by Ms. Block, and then Ms. Charlton.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you, Chair, and thank you, Mr. Hamilton, and Minister Rickford, for being here today.

My first question is in regard to mentions of the Ring of Fire in the estimates. Back in 2013, Minister Clement, likened this project to the Alberta oil sands and estimated there could be up to $130 billion of wealth tied up in this mining project. Mr. Clement also said that he didn't believe this was an opportunity we could afford to pass by.

It's worth noting that budget 2013 made some very small, almost token if I may say, commitments to the Ring of Fire. Last fall, Lourenco Goncalves, the CEO of Cliffs Natural Resources, commented on the progress of this project. He said, “I don't believe under my watch, and I plan to stay [alive] for the next 50 years...that the Ring of Fire will be developed". He also said, “The Ring of Fire is a remote land with no railroad, no road, nothing”, and he added, “Without the infrastructure, there’s nothing we can do.”

Since then his company, as you know, has abandoned the project and taken a $264 million writedown as a result.

The Ontario government has put a billion dollars on the table in an effort to get the project going with the proviso of course that the federal government also comes to the table. This mining project is in your riding, Minister, so I'm sure you can highlight exactly what new support there is for the Ring of Fire in these estimates and explain how this new support will help kick-start this $130-billion project.

[Greg Rickford, Conservative, Kenora, ON]

I appreciate the honourable member's question.

The remarks from the new president and CEO of Cliffs are highly regrettable. I don't think they reflect their own internal business conditions and ability to actually advance in the Ring of Fire.

That said, the member's question addresses two key elements that structurally pose significant challenges for Ring of Fire development. They are remoteness, and obviously the costs of separation. This member coming from Thunder Bay—Superior North I think would be particularly interested in the large residual question of how that region is developed. Since the markets are not substantially developed—

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

No. My question, in fact, Minister, is exactly what new support there is for the Ring of Fire in these estimates and explain how it will kick-start this critical development.

[The Chair, Conservative, Leon Benoit]

Mr. Rafferty, could you give the minister a little more time to respond.

[Greg Rickford, Conservative, Kenora, ON]

Fair enough. I appreciate his persistence in this.

Obviously, the Ring of Fire is identified as a stand-alone opportunity within the Nishnawbe Aski Development Fund operated out of Thunder Bay. I believe the province's political rhetoric was dialled down significantly when they understood this Ring of Fire opportunity the way we do.

This is about regional capacity and access, and Minister Gravelle and I announced what I think the folks in Thunder Bay appreciate. I was just there last week, and I heard loud and clear that for the first time issues of access and opportunities for access actually bring northwestern Ontario into play. Previous proposals for access to the Ring of Fire, the chromite and rare earth elements, had not considered, frankly, northwestern Ontario even though it exists in northwestern Ontario.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Excuse me, Minister. Thank you for that. I wonder, though, if you could get right to the question, which is this. Can you highlight exactly what new support there is for the Ring of Fire in these estimates and explain how that support is going to kick-start the project?

[Greg Rickford, Conservative, Kenora, ON]

Sure.

We are obviously very pleased to see a page in the budget that talked about the Ring of Fire and the second opportunity, if you will, but a barrier for the development of Ring of Fire is technology innovation around separation. The cost—as the member put in his question—of developing chromite and platinum, treasury metals, rare earth elements, in that region is a significant barrier.

This budget announced $23 million, earmarked specifically for chromite and rare earth elements separation technology innovation. This actually has two specific intentions: first, to reduce the cost of separation of those elements from carbon or iron ore, and second, to do it in a more environmentally friendly manner.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you for that, Minister.

As you're aware there are actually six chromite mines in Canada, either operating or proposed. But I'm specifically asking about what new support there is for the Ring of Fire in the estimates. Also, please explain how this support is going to kick-start this project.

[Greg Rickford, Conservative, Kenora, ON]

The member's question obviously deals, again, with the ability for Ring of Fire to be competitive domestically and with any other chromite production in the world. We know it's the largest deposit, arguably, based on the technology and information data we have. My understanding is that it is somewhere in the realm of a 200-year supply.

The question is how we move forward on the two key barriers and opportunities of remoteness and the costs of separation. In previous budgets we have created opportunity for legacy infrastructure, strategic investments that the province has now come to understand as places where we can deal with the remoteness factor; and obviously, in this budget, to deal specifically with technology innovation around separation. That's identified clearly and explicitly in this budget. For the Ring of Fire, obviously, a particular page in the budget outlines why this investment is important.

Also, I heard that loud and clear in Thunder Bay from experts in the mining sector, who were very enthusiastic about their ability to participate. There are a number of companies in Thunder Bay well positioned to take advantage of this extraordinary investment on the separation costs.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister.

Go ahead, Ms. Block.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

Minister, Deputy Minister, thank you very much for joining us today to speak to the mains. I do want to take this opportunity to thank you both, for your very excellent leadership of this important portfolio, as well as acknowledge the very capable officials in the department who support your work.

I want to talk a little bit about the major projects management office. Last year our committee was briefed on this initiative and learned that it is a horizontal partnership of 12 federal departments and agencies and that it was established in 2007 to improve the regulatory system for major resource projects. Also, we understood that it has resulted in significant improvements in the efficiency of the regulatory review process for major resource projects.

The main estimates show the funding for MPMO of $81 million over three years sunsetting. In your opening remarks, however, you noted that budget 2015 supports new investment in the MPMO. Is ensuring an effective, accountable, transparent, and timely review process still a priority for the Government of Canada, and can you expand on how this funding would contribute to that?

[Greg Rickford, Conservative, Kenora, ON]

Sure. Thank you for that question.

Obviously, in answering I have to contain my enthusiasm for the major projects management office and the terrific results, frankly, that it has had. There are myriad examples, but on to the more pointed question around the efforts to improve the regulatory system and the aboriginal consultation associated specifically with it, we are providing $135 million over five years, starting in this fiscal year, to continue to improve the efficiency and effectiveness of project approvals through the MPMO initiative, our plan for responsible resource development.

MPMO has transformed the approval process for major natural resource projects by shortening the timelines, streamlining reviews, and improving accountability by monitoring and reporting on the performance of federal regulatory departments. More than 35 major mining, hydro, nuclear, and oil and gas projects worth more than $105 billion have completed the review process since the initiative was established. I think, objectively, that's a terrific result, and this has helped ensure that Canada remains an attractive and competitive place to invest in resource projects.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

My second question is this. I know that our responsible resource development plan has truly driven much of the work that I've had the privilege of being involved in over the last year and a half, and that one of the pillars is enhancing aboriginal engagement. I know that the natural resources sector is the largest private employer of first nations in Canada. I know that you're aware of that, and that it is clear that the success of this sector depends on their full participation from environmental safety to the economic benefits of responsible development.

In the main estimates, we make $3.4 million available for aboriginal participation in west coast energy development, and I do understand that budget 2015 makes further investments in support of aboriginal consultations on resource projects. Can you tell us more about how these funds will be used and how they will further enable first nations to continue to make these very important contributions as full partners?

[Greg Rickford, Conservative, Kenora, ON]

Sure. Let me just say that, in addition to the resource sector being the largest employer of first nations, in just a little bit here, I'll be sitting down with, I think, the benchmark company that's done this right at every turn, Cameco, working with first nations communities.

MPMO has had tremendous success just in the opening of the office in Vancouver alone. We have focused on coordinating a whole-of-government approach to ensure that consultations are effective, and that they're consistent between projects and responsive to issues and, I would submit respectfully, opportunities.

We have in a number of instances just since last June, been able to address a number of key opportunities. Some would call them issues, but I think we've turned them into opportunities that first nations communities in the Lower Mainland, for example, and in the interior of B.C. have said are long-standing things that should be addressed before they could get down to the nub of some of the other potential opportunities in the energy sector. The MPMO-West office has worked as an effective clearing house to address a number of these—as I say, I'm going to stay positive and call them opportunities—but they do fit into a broader narrative of reconciliation with first nations in being consistent with any and all opportunities in the resource sector, particularly in B.C.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister.

We're going to end with Ms. Charlton.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Chair.

Thank you very much, Minister and Deputy Minister, for being here today. We really appreciate the opportunity to ask a couple of questions.

In the ministry's planning and priorities document, there are repeated references to renewable energy technologies and energy efficiency programs, all of which are geared, or at least in part geared, to decreasing Canada's greenhouse gas emissions. As you can imagine, I fully agree with that goal and, as wouldn't surprise you, would love to see much more on that in the budget.

But when I look at the estimates, the government is cutting the very programs that we need to even begin to take steps to fighting climate change. I'm looking specifically at cuts of $9.4 million from the clean energy fund, $5.4 million taken from the wind power production incentive program, and $7.2 million taken from the eco-energy innovation initiative.

Minister, when I look at that, I guess I want to know what I should take away from those numbers. Are you at a point where you're saying we're done, we don't need to fight climate change anymore, or are you saying that you've actually just given up?

[Greg Rickford, Conservative, Kenora, ON]

Neither.

Respectfully, as I'd said earlier and I won't repeat my answer, but I will point out that obviously we're expected to invest more than $1 billion by 2017 just in biofuels. As I mentioned earlier, and it's relevant to some of the programs the member listed, declining funding to the biofuels program and any other programs is due in some part to the funding profile for each of the programs as they wind down and projects near completion.

Obviously in the case of the eco-energy efficiency program, Canada comes from a position of strength, tied with the United Kingdom in energy efficiency improvements among 15 countries. More than $195 million invested over five years reflects real cost savings in energy efficiency for businesses and consumers to the tune of $1 billion, but importantly to the member's question, reduces greenhouse gas emissions by some four megatonnes by the year 2016. The current efficiency program is funded until March 31, 2016.

I see she wants to ask another question.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Yes, I would very much like to follow up on that because I don't think there's any doubt that if you look at our comparators across the world, we're laggards in this regard.

There's a real opportunity for us here to engage in some diversification, yet I listen to your answer, I want to take you at your word, but I need you to explain to me specifically how you expect to achieve real emissions reductions when you're gutting the very research and development budget that was supposed to help us achieve that goal.

[Greg Rickford, Conservative, Kenora, ON]

Respectfully, I don't share the view of the member that these are being gutted or that Canada's position is laggard.

[Chris Charlton, NDP, Hamilton Mountain, ON]

There are $9.4 million, $5.4 million, and $7.2 million in cuts.

[Greg Rickford, Conservative, Kenora, ON]

I would suggest that importantly, if Canada's place in the world in clean energy technology and innovation is second only to Japan, I'm inclined not to label that as laggard.

As I said earlier, both in the case of biofuels, planned spending for the eco-energy efficiency program and the eco-energy innovation initiative in 2015-16 is $7.2 million less than in 2014, and this is by design. It reflects the funding needs of the projects being supported for this fiscal year. The program is approaching the final year of its five-year mandate, with most projects expected to be completed by March 31, 2016.

I think that in fairness, the exercise there is to evaluate their effectiveness and policy and strategy around...the return of these programs will be designed based on what's working. So far we have every indication, if we are second only to Japan, particularly in clean energy technology and innovation, that we're coming from a position of strength on this.

[Chris Charlton, NDP, Hamilton Mountain, ON]

But, Minister, you have to agree that if you take green energy, renewables, efficiency, I don't care which program, if you take it seriously, you have to forgive Canadians for being a little doubtful of your commitment when you look at the long-term trend line. You're going from $253 million in 2015 all the way down to $137 million projected for 2017. Just about half the budget is going to be cut, and you want us to believe that you're serious about these programs, and that you're serious about ramping up the fight to battle climate change. It stretches credulity when you look at the numbers. I appreciate the rhetoric, but the numbers belie what you're saying.

[Greg Rickford, Conservative, Kenora, ON]

It's not rhetoric. These programs are set to wind down and significant projects are in place that look out to 2016 and 2017. They're fully supported in the past and present fiscal years and are set to continue through 2016, at least in the case of one or two of the programs mentioned by the member, and in other instances through 2017. So we'll go through the appropriate science and fact-based exercise of ensuring that these important programs put Canada at the top of the list in terms of performance.

I think Canadians appreciate the cost savings, energy efficiency, and contributions made to reduce greenhouse gas emissions. As I said earlier, Canada is in second place as the country most invested in clean energy technology, and we're very proud of that accomplishment.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister, and thank you, Ms. Charlton.

Thank you for your presentation and for your fulsome answers to all the questions that the members asked here today.

We'll suspend the meeting and come back with departmental officials.

By the way, thank you, Mr. Hamilton. We'll see you in the second part of the meeting too.

The meeting is suspended.