Natural Resources Committee on Dec. 6th, 2016

[The Chair, Liberal, James Maloney]

Good morning, everybody.

Thank you all for joining us today.

Minister Carr and Deputy Minister Tremblay, we're very grateful for you taking the time out from what we know is a very busy schedule to be here and speak with us today.

I understand we have some time constraints today. You have to depart by 9:25 a.m. or so, so I will jump right into it, and I won't take up any more time.

I'll just turn the floor over to you, sir, and follow that up with questions from our members.

Thank you again for joining us.

[Jim Carr, Liberal, Minister of Natural Resources]

Thank you, Chair.

Good morning, colleagues. It's good to be back with you again.

When I was here in February to discuss my mandate letter, and again in April on my department's main estimates, we talked at length about the need to develop our resources sustainably, about the responsibility to ensure that economic prosperity and environmental protection go hand in hand, about the opportunity to help indigenous peoples and local communities benefit economically and socially, and about the potential to make resource development a truly nation-building exercise.

Ten months later, all of those things are still true, and more urgent than ever.

We are at a pivotal moment when climate change is part of the significant challenges of our generation, and when investing in clean technology and innovation in the resource sectors is the new imperative.

The good news is that there have been encouraging signs since I was last here. Some commodity prices—particularly some metals and minerals—are beginning to bounce back. Some resource producers are talking more optimistically about the future.

There is still a lot of work to do. While Canada has the resources and know-how to lead the global transition to a lower carbon future, we will only do so by ensuring that our environmental house is in order, continuing to engage meaningfully with indigenous peoples, and ultimately earning the confidence of Canadians.

That's been our government's focus throughout its first year. We recognize that there are no easy answers. There's no unanimity on what sustainable resource development should look like. Even many families sitting around their dinner tables may not agree. There are some who argue that we should never build another pipeline or an LNG plant, and some who say we should always build these projects, but I don't think, Mr. Chair, that either side will carry the day.

In our consultations with Canadians, we've seen a consensus forming, a widening middle ground that sees economic growth and environmental stewardship as equal components of a single engine of innovation. Our government is determined to lead the way. We demonstrated that again last week with the decisions we announced on several major pipeline projects.

We have approved the Trans Mountain expansion and Line 3 replacement pipelines with appropriate binding conditions, and we rejected the Northern Gateway pipeline while imposing a moratorium on crude oil tanker traffic along the northwest coast of British Columbia. In each instance, the decisions we took were based on solid science, meaningful consultations, and the best interests of Canada. I am particularly proud that our decisions incorporated the unique connection indigenous peoples have with the land, the air, and the water, a sacred relationship passed on from generations to us, and for which we have the responsibility to pass on to those who come after.

These decisions we've taken will create good jobs, more than 22,000, and they will help us reach our climate change targets by leveraging the fossil fuel resources we have today to deliver clean energy solutions for tomorrow. As the Prime Minister has said, the choice between pipelines and wind turbines is a false one. We need both to achieve our goal. Our first budget spoke to this reality and Canada's potential by setting the table for investing significantly in clean technology, modernizing federal environmental assessments and regulatory reviews, and strengthening public consultations.

Today's supplementary estimates build on that, with more than $28 million in proposed new funding for Natural Resources Canada. Let me briefly highlight what we are doing in each of these areas and why.

The first area is clean technology. As a nation rich in natural resources, we need to find cleaner ways of developing them in order to meet our climate change commitments. Our government is investing $1 billion over the next four years to support clean technology, including in the natural resource sectors.

For example, the supplementary estimates propose investing $2.4 million to develop additional data on the clean technology sector, to support the energy innovation program, and to update the ENERGY STAR portfolio.

Why fund these things? Because the global clean technology market represents an exciting opportunity for Canada's natural resource sectors; a source of new, clean jobs; and a driver of prosperity for all Canadians. As part of that, we've launched the Let's Talk Clean Resources project to engage Canadians on new measures to support clean technology producers and increase investment in clean technologies in the natural resource sectors.

The second area regards modernizing our environmental assessments and regulatory reviews.

Developing our resources and getting them to market in an environmentally responsible way requires strong regulatory processes that carry the confidence of Canadians. We've understood that from the beginning, which is why we quickly implemented an interim strategy for reviewing major resource projects already in the queue.

It's an approach based on guiding principles that include broader, more meaningful consultations and a new requirement to consider upstream greenhouse gas emissions.

Today, we are seeking $2.8 million to support this enhanced level of scrutiny. As well, we are proposing to invest $3.4 million to support the work of the new five-member expert panel appointed last month to review the structure, role, and mandate of the National Energy Board.

We want to ask Canadians questions that are as fundamental as they are far-reaching. If we had to create a Canadian energy regulator from scratch, what would it look like? What principles would determine its structure? And what would its relationship with the government be?

The supplementary estimates also include $2.9 million to fund NRCan's efforts under the national marine conservation targets.

While the initiative is being led by the Department of Fisheries and Oceans, my department is seeking this funding to support scientific and economic assessments of petroleum resources in proposed conservation areas, in a whole-of-government approach to protecting Canada's marine and coastal areas.

The third area I'd like to speak about is strengthening public consultations.

As part of our investments to reform Canada's environmental assessments and regulatory reviews, we have placed an emphasis on enhancing public consultation. We cannot achieve any of our goals if we don't earn the public's confidence.

We've been engaging Canadians every step of the way, inviting their comments on how to modernize the National Energy Board, and gathering their thoughts through new panels that complement the NEB's formal hearings on projects such as the Trans Mountain expansion and energy east.

These supplementary estimates are critical to support public consultations that enable us to listen to Canadians because if we don't, we will never earn their trust.

Other highlights from the supplementary estimates include $1.2 million to support green jobs under the renewed youth employment strategy, $13.2 million to settle Soldier Settlement Board mineral rights with Manitoba, $2.6 million being transferred from the Department of National Defence for ongoing operating and maintenance of the Natural Resources Resolute facility and related logistics support to the Canadian Forces Arctic Training Centre, and more than $275,000 for safe and secure shipping.

Combined, all of these investments will help to strengthen our resource sectors, spur innovation, and support new research.

Mr. Chairman, these are challenging times, but they are also times of opportunity if we are prepared to seize them. I am asking for your support for these important initiatives, and for you to approve these estimates.

I welcome any questions you may have.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much, Minister.

Deputy Minister, do you have any comments before I turn it over to the floor? No. Okay.

Mr. Harvey, I believe you are up first.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

First of all, I would like to thank you both for being here today.

Minister, I know your schedule certainly is very active, and we really do appreciate the time you've spent to be here with us today.

My question is related to the fact that our government was elected on the belief that the environment and the economy must be balanced. We know that developing our resources and getting them to market benefits us all, creating jobs, spurring innovation, and ensuring that we have full value of our energy products.

To support this, and build Canadians' confidence in the environmental regulatory process, our government has initiated a review of the environmental process and a full modernization of the National Energy Board. We've established an interim strategy to give greater certainty and public transparency to the review of the project, but Canadians want to make sure that we will still be able to fulfill our environmental responsibilities, that we can still meet our climate change commitments, that we protect wildlife, and that we are basing decisions on science and evidence. They also want to know that our indigenous peoples will share in the benefit of resource development and be consulted throughout the process.

Last week, our government announced several important decisions that will have a significant impact across this country. You played a critical role in those decisions. They will create more good, middle-class jobs while protecting environmentally sensitive areas.

Minister, please give your thoughts to the committee on the steps being taken to balance the protection of the environment with finding new markets for our resources, ensuring that they really work hand in hand.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

That's at the very heart of establishing public confidence in what we do, because it's not possible anymore to invest in the economy without an eye on the impact on our environment. I think it's also possible to develop a more prosperous future while enhancing environmental sustainability.

That leads the government to make significant investments in clean technology, relying on the innovative powers of the entrepreneur. We have taken very serious steps to ensure that environmental protection and economic development go hand in hand. There are many examples within our budget and within policy statements that we've made.

Also, I think it's very important to point out that, just several weeks ago, the Prime Minister was in Vancouver and announced a $1.5 billion investment in the oceans protection plan. What's so important about that is that it has also led to very important partnership offers to indigenous communities, to be a part of first response, to be a part of the protection of the coastline.

I know, from so much time spent this year with indigenous communities on the coast, that it is that relationship with the land, the air, and the water that's fundamental, as part of their responsibility to take what was given to them by generations who came before, to leave our environment in a better place. We must respect their traditional values, but also invite indigenous peoples to be part of the process every step of the way. That's what the oceans protection plan does.

On the climate file, we've announced very important measures across the Canadian economy, working with the provinces and the territories.

Everybody knows that the Prime Minister will be sitting down with leaders at the end of this week to talk about a pan-Canadian approach. You know that we have announced the phase-out of coal by 2030. You know that we will sign equivalency agreements with the provinces because we think it's so important that the provinces, within their own jurisdiction, take the leadership role.

Working with the leaders of other jurisdictions, working with indigenous communities, we believe that we will satisfy the three pillars of economic growth, environmental sustainability, and working with indigenous peoples.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I'm going to give the rest of my time to Mr. Lemieux. I know he has a question.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Harvey. Thank you, Minister.

The National Energy Board has often been in the news lately. Three members of the board recused themselves from the hearing panel for the Energy East project. Moreover, some critics are claiming that the board is too close to the energy industry, which it is responsible for regulating.

During the election campaign, our government promised to modernize the National Energy Board, because we believe that the only way to guarantee the social licence of energy projects is to re-establish Canadians' trust in the assessment of these projects.

I believe there have so far been two announcements regarding the board's modernization. The first was regarding the government's intent to consult Canadians during the summer. This announcement was followed by the appointment last month of a five-member committee of experts. I am mentioning all of this because I see that in the supplementary estimates, $3.4 million have been earmarked for the modernization of the National Energy Board.

Minister, could you tell us how this additional amount will contribute to the modernization of the National Energy Board?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

Our government committed to implementing this open, fair, inclusive and transparent process to guide its decisions regarding large energy projects. To respect this commitment made during the election campaign, I have set up an expert panel tasked with reviewing the structure, role and mandate of the National Energy Board. The committee will be providing me with its report in early 2017.

The numbers always get me. I'm getting better with the language, but the numbers are tougher.

Our government is committed to an open, fair, inclusive, and transparent process for decisions on major energy projects.

We did appoint an expert panel of five, and may I say that two are former indigenous chiefs, leaders, within Saskatchewan and British Columbia. One person from Alberta has deep experience with the National Energy Board—it's never a bad idea to appoint someone with direct experience on regulatory issues—and two others have a broad and deep set of experiences. In combination, the five, I think, will give government very good advice. I would like to remind members of the committee that this is one of four separate inquiries; two from expert panels and one that I have appointed...

Do you want me to stop?

[The Chair, Liberal, James Maloney]

If you don't mind, Minister, I'm going to interrupt you at that point, so I can move over to our next set of questions. Maybe we can revisit that in the next round.

Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you, Mr. Chair and Mr. Minister. Unfortunately, we only have 20 minutes here for questions, so we'll probably only get one round in.

In your statement you said that this would be the opportunity to help indigenous peoples and local communities benefit economically and socially, and in prepared questions from the Liberal Party you went into more detail about how this is just so beneficial to indigenous communities.

How did your arbitrary political decision to kill Northern Gateway help the 31 aboriginal equity partners, who stand to lose $2 billion from this political decision that wasn't based on science and with evidence that wasn't based on any independent regulator's review? You talk about meaningful consultation on the coast. To my knowledge, no coastal first nations communities were consulted on the northern tanker ban, which is another arbitrary decision that was not based on science. None of the aboriginal and Métis communities that had signed equity partnership agreements, a world-leading system that would give them a 33% stake in this project, were consulted, as well.

How do you reconcile talking about meaningful consultation when you abandoned the aboriginal equity partners and did not consult them before killing economic opportunity in their communities?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

The significant difference between the Northern Gateway project and the two pipelines that were approved by Canada last week—namely Line 3 and the Kinder Morgan—is that these are established pipelines. In the case of Line 3, it's a replacement of stale, aging infrastructure that will double capacity. In the case of Kinder Morgan—and this, I think, is sometimes lost in the discussion—89% of the pipeline route is on existing rights of way—

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I'm aware of that, Minister. I asked about indigenous consultation.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

—and there have been 39 benefit agreements signed with indigenous communities along the way. The government determined, in Canada's interests, that those two pipelines should be approved and that there not be a crude oil pipeline in the Great Bear Rainforest.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Okay, and I want to pick up on that again.

When our government made decisions on energy projects, be they mining projects or pipelines—in question period you like to tell me how much further ahead you are—we approved the Northern Gateway based on the National Energy Board recommendation. We also denied Prosperity mine and New Prosperity mine when the independent environmental assessment process made that decision based on science, not on the politics of it.

Speaking to your decision to kill Northern Gateway, based again on the political considerations....

Brian Lee Crowley, the managing director of the Macdonald-Laurier Institute said:

This throws the entire process into great confusion...I think [it] creates a huge disincentive for people to want to risk their money on pipelines in Canada because we've gone from a predictable, rules-based system to one where the outcome depends on whether the Prime Minister of Canada thinks your pipeline runs through a forest...he likes.

Can you explain this to me? It's a great talking point, the Great Bear Rainforest and the Douglas Channel, but it isn't based on science.

On the Trans Mountain pipeline, the Prime Minister said in his announcement that we would consider zero political arguments and that there would be no political arguments that would be allowed to stand. This is based on the NEB decision. The ministerial advisory panel that you set up—and we have no idea how much that cost Canadians—delayed the project by months. It did not affect a single of the 157 recommendations made by the NEB review board that was set up previously.

Why did you abandon that process that you used for Trans Mountain? You used the NEB process for Trans Mountain to justify it and said, “this is based on evidence”, and “this is based on science”, and “no political arguments will stand”. Then you went with completely political arguments against the Northern Gateway pipeline. I think that industry is having a tough time reconciling that. I think investors in this country will have a tough time reconciling that.

As we move towards energy east, a pipeline that the New Brunswick Premier has said that he wants to see, how can you assure investors? How can you assure the company that they won't spend, like the Northern Gateway pipeline did, $600 million only to have the project gonged and 4,000 jobs killed because the Prime Minister of Canada thinks your pipeline runs through a forest he likes?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

For a number of years, I was in opposition in the Manitoba Legislature, and I think I understand what the role of opposition is. I also think that it would be important for all members to be mindful of what was done. The member wants to talk about 4,000 jobs that he says were not created because of this process. We could also talk about the 22,000 jobs that were created because of this process.

He could talk about a signal to investors. He could talk about the signal that the government sent to investors around the world when it approved the Pacific NorthWest LNG project. He could talk about the signal we're sending to investors in the approval of Line 3 and the approval of TMX. He can talk about political decision-making—

[Shannon Stubbs, Conservative, Lakeland, AB]

Or you could answer the question.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

The answer to the question is that we have created 22,000 jobs with serious consultation with indigenous communities up and down the line. We know that there is not a set of decisions on these files that is going to create unanimity. People are going to disagree, and that's fair enough. We welcome that.

I'm disappointed that the member, especially from the part of the country where he lives, and where his colleagues live.... I was in Alberta last week, and I was in Calgary and Edmonton. I could feel the spring in the step of people who were pleased that the Government of Canada, at long last, had approved these pipelines so that more people could be back to work at a time when creating jobs for their families is so important.

[The Chair, Liberal, James Maloney]

Thank you very much, Minister.

Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you, Minister, for being here this morning.

Because we have limited time, I'm going to jump right in, and my comments are going to be around the new NEB process, contrasting it with the old. It's a process that you have said many times in the House—I've lost track of how many times—should be engendering the confidence of Canadians in the energy industry.

I want to talk about the interim processes that you brought out in January and that were used for the Kinder Morgan decision. Many have criticized these interim measures, or at least the panel that went around British Columbia in the summer discussing the Kinder Morgan decision. Communities, including indigenous communities, were given next to no notice to take part in the meetings. No transcripts or records were made of the testimony, and the report itself stated, in the words of the panel, “We understood that our process would not be a redo of the NEB review”, which is what your party promised during the election. They also said:

...about the important issues they felt had been missed in the NEB process, our panel hadn’t the time, technical expertise or the resources to fill those gaps. Our role was not to propose solutions, but to identify important questions that, in the circumstances, remain unanswered.

The report made no recommendations. It only gave the government six questions, all of which the government failed to address in the approval of Kinder Morgan.

My question is, what was the point of this interim process? If it was meant to give the government advice, if it was meant to engender confidence, it has clearly failed on all those grounds. To engender confidence you have to give people the feeling that they have been listened to. Your government met with Ian Anderson, the head of Kinder Morgan, 36 times in the last year, in private meetings, and yet you give the other concerned communities very little time and very little credibility.

I just want to know how this is going to engender confidence.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

I appreciate the question, Mr. Chair, because it gives me a chance to review just how extensive the consultation was and how communities and individuals who felt they hadn't had a chance to express themselves through the National Energy Board review did. Look at the numbers. They are very impressive. Hundreds of people came to these meetings. I believe they responded to a legitimate call for them to be heard, and they were heard, and it was a reflection of what they said that was, I think, reported by the panellists in their report to the government.

More than that, on the website that had been posted throughout this process, there were 35,258 Canadians who completed an online questionnaire about the project, all of which is publicly available; and these consultations complemented the NEB review process where more than 1,600 participants had the opportunity to provide evidence.

Government officials consulted with 117 potentially affected indigenous groups and the outcomes of these consultations are publicly available.

Well, that is a lot of consultation. That is a lot of opportunity for Canadians from coast to coast to coast to weigh in on that decision. Those were the factors of public confidence that the government weighed in its final decision, knowing all the time that this is phase one of the reform of the National Energy Board—

Go ahead.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I just want to cut in and move it along to energy east, because whatever you say about the consultations, it's how people feel they were listened to. It's clear from what's happening now that there is still a considerable lack of confidence in the system by many people, and we're not talking about fringe elements here. We're talking about the mayors and councils of large cities in Canada.

Moving to energy east, how are you going to take the lessons you've learned in the Kinder Morgan process to make changes to the NEB process for energy east? I just want to know what specific changes you'll be making to learn from these mistakes. Or are you going to commit to not proceed with the assessment of energy east before you have an entirely new assessment process in place?

I just want to know how that affects....

[Jim Carr, Liberal, Winnipeg South Centre, MB]

The member knows that we have appointed four temporary members of the National Energy Board to be assigned to the energy east project. An additional three will be appointed very soon, in a matter of weeks, not months. Then the National Energy Board, which is at arm's length from the government, will determine how to proceed. If it decides that it's going to continue from where it ceased its hearings, then there will be approximately 21 months of consultation within communities followed by an additional period of government consultation when that is through.

Canadians will have ample opportunity to express themselves on the energy east project. We have learned that it's an essential part of enhancing credibility, through time and through extra personnel. Meanwhile, the expert panel will be advising government on permanent changes to the National Energy Board.

[The Chair, Liberal, James Maloney]

Thank you, Minister.

Thank you, Mr. Cannings. That's all your time.

Mr. Lemieux, the floor is yours. I interrupted you previously.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Mr. Chair, before giving the rest of my time to my colleague, Mr. Rusnak, I would like to give the minister the opportunity to finish his response regarding the setting up of the five-person expert committee, if he has anything he would like to add.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We were very pleased and honoured, actually, Mr. Chair, to find five such distinguished Canadians with relevant experience on what it takes to advise government on regulatory reform. The assignment is exciting. We really said, “Here's a blank sheet of paper. What we want you to do is write on this blank sheet of paper a world-class regulator from a Canadian perspective.” We asked them to consult and come back to us with a set of ideas by the end of March 2017, which will coincide with the work done by an expert panel that was created by Minister McKenna on the Canadian Environmental Assessment Agency.

Two parliamentary committees of our colleagues will be looking at recommendations on the navigable waters act and the Fisheries Act. Those four sets of consultations will come back to the government at the same time, at the end of March in 2017, which the government will then use to introduce to Parliament and to the citizens of Canada a permanent reform of the environmental assessment process in our country.