Natural Resources Committee on Feb. 23rd, 2017

[Dr. Pierre Desrochers]

I have done my best for a number of years. Can we explain things to people who don't want to listen to us?

In this case, I think the facts speak for themselves. Canada has made significant progress. The deposits may be of lower quality and less accessible than in other economies. However, we use by-products, we capture emissions and we use natural gas much better than in many Middle Eastern countries or Nigeria. These places, in theory, have better quality deposits. We need to explain the processes, Canada's performance and the improvements over time. I trust that, at some point, we'll manage—I'll say it again—to explain things based on facts. That said, I admit that it's difficult.

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

How can we explain all this in simple terms that make sense to Canadians?

[Dr. Pierre Desrochers]

I've written documents on this subject for the general public. Many things are available online, but how do we explain them?

I've been giving energy policy courses for a number of years. When facts are presented, reasonable people will recognize that there may have been some exaggerations. However, how we change perceptions? If I had the magic formula, I would perhaps have another career at this time.

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

I was expecting answers from you today.

[Dr. Pierre Desrochers]

In any case—

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

We will—

[Dr. Pierre Desrochers]

There is material, and I did my best. I tried to present accessible material, and the material is available for free online.

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

To finish, I will address the three witnesses.

How do you think carbon pricing will affect the development and implementation of new clean technology in Canada? I want to hear from all three of you.

[Brady Yauch]

There's the idea that if you get a carbon price, it sends the risk signal to all industry, and then they can decide how best to attack it. If government comes up with an idea and they've quantified the cost of carbon to Canada and Canadian taxpayers, Canadian ratepayers, they can apply that price to industry. Then industry can go on their own and best figure out how to deal with it.

The carbon price has the luxury of being the most transparent to everyone, in that it clearly tells everyone what we think the cost of carbon is to this country, and then business can deal with it however they want.

[Michelle Brownlee]

As I was saying in my remarks, the carbon price tries to capture that environmental value, or put a price on the negative impact of the activity. As such, it rewards the activities that don't suffer that cost. The cleaner technologies are induced or encouraged, incentivized, to come onto market. It helps to level the playing field between the technologies that are polluting, that have an advantage currently because they're not priced, and the ones that are cleaner and are sort of disadvantaged because we're not taking account of the fact that they are cleaner.

There is a lot of evidence to show that the more flexible the regulation or the approach, like a carbon price or a well-designed regulation, they do induce innovation. We have done a meta-analysis of the Porter hypothesis, which shows that it does hold true in many circumstances. I can share that with you, if you'd like.

All the evidence we've seen, in looking through the academic research as well as the grey literature and talking to others, is that it really does induce innovation. The challenge is that the carbon price is much lower than the true social cost of carbon, so it will only induce so much. There are other market barriers and challenges that will also require some policy intervention.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Strahl.

[Dr. Pierre Desrochers]

I need 20 seconds. Carbon taxes—

[The Chair, Liberal, James Maloney]

No, no, I'm sorry, but I'm going to have to cut you off.

Mr. Strahl.

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

Thank you.

I would argue, in response to some previous questioning, that a prolonged and very purposeful campaign against Canadian oil is a large part of why some people consider it to be dirty, when in fact we know that it's among the cleanest technology and lowest-carbon oil out there.

My question was going to be to you, Mr. Desrochers.

I recently spoke with an entrepreneur who has developed a “waste heat to energy” product. She expressed extreme frustration with government policy, which she described as the government always trying to “fund the moonshot”. It continues to go back not to proven technology, which is marketable and could be scaled up and brought to bear in real-world applications, but to, as she said, the moonshot, which it funds with billions of dollars.

If government were actually good at fostering innovation, would the billions of dollars that have been spent by successive governments not have made Canada a world leader in this? She was certainly frustrated that she was finding more ability to commercialize her product in other jurisdictions than in Canada.

[Dr. Pierre Desrochers]

The only problem I would have with that characterization is that governments are not subsidizing the moonshot; they're subsidizing sailboats. You have to ask yourself, why, when the wind was there all along and we had sailboats, did coal and diesel and other fuels come along and displace that energy? The world was not short of windmills in the 19th century. The Egyptians had solar energy 2,000 years ago. Carbon fuels were developed and displaced those energies because they had a number of advantages. They're reliable. You know exactly what you're going to get. You know how much you're going to get. You know when you're going to get it. Unfortunately, governments tend to associate cleaner with renewable, whereas in practice it was never the case.

I share the frustration of your entrepreneur, who would actually create real value and fewer problems than existed before. My beef would be with the notion that the government is going for the moonshot. No, they're going for the sailboat.

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

Mr. Chair, I'm going to share my time with Mr. Barlow.

[John Barlow, Conservative, Foothills, AB]

Thank you, Mr. Strahl.

Mr. Yauch, you talked a little bit about what's going on in Ontario, and certainly I think we're going about this all wrong. I like to look at Gridwatch for Ontario, and we're seeing it in Alberta as well. We're spending billions of dollars on wind and solar, which is getting us less than 10% of our energy source. If you look at more traditional fuels—coal and natural gas—which are supplying the vast majority of energy needs, they continue to be more innovative and more technologically advanced, and they get us to where we need to go sooner.

I would just like your opinion. Are we wasting taxpayer dollars with these wind and solar projects? Would it be more beneficial to look at more traditional fuel options? If government is going to get involved, should we go more in that direction?

[Brady Yauch]

First, renewable energy has a role to play in every energy system. It can be there, and it can provide some sort of value. But what happened in Ontario, and what's happened in other jurisdictions around the world that have gone all in on it, is that they overemphasize the value of it and they underemphasize the value of traditional sources of generation, such as natural gas and coal. While coal and natural gas have some environmental side effects—we all know about them—they also provide power in a reliable manner that is cost-efficient.

In Ontario we decided that we're going to pick these two as the winners and put them on a pedestal. The reality is they haven't been able to stand on that pedestal for very long because they can't provide what we all want, which is clean, reliable and cost-effective power.

[John Barlow, Conservative, Foothills, AB]

Mr. Desrochers, you had a chance to talk about it, and I want to give you the opportunity to finish your thought.

I've looked through your deck. You see the innovation that we've had around the world without a carbon tax, and I don't see that our having a carbon tax will mean that all of a sudden we would have this incredible innovation in green technology. I don't think that's been proven. Do you—

[Dr. Pierre Desrochers]

That's my problem, if I may say, with people who advocate carbon taxes. They operate on the premise that there was no intelligent life before 1960.

I mean, all these ideas have been around for a very long time. Why did business spontaneously behave in a green way in the past? Well, it's because when you buy raw materials and you throw them through the smokestack or throw them in the river, you're wasting money. There's always been an incentive for firms to extract the most value possible out of everything they pay for. This is why over time everything becomes more efficient. This is why pollution is spontaneously turned into valuable by-products. This is why our economy has become more self-contained. The profit motive, I would argue, provides all the incentive you need.

Of course, you need to penalize people who commit real environmental crimes, such as releasing stuff in rivers, but it's not a carbon tax you need; you need to hold firms responsible. In the past we had lawsuits. If you dumped your trash in your neighbour's backyard, he could sue you. That was an additional incentive not to do it, which I would argue worked pretty well. All this talk about green technology is completely historical. At some point, who are you going to believe, these theories that have not been proven or the images that I've given you?

[John Barlow, Conservative, Foothills, AB]

We had the department in here the other day. I asked if they could define for me clean technology, green energy, and I was surprised when they said they didn't really have a definitive definition.

That's a problem.

[Dr. Pierre Desrochers]

Well, you know, we're human beings. We breathe, we exhale, we do all sorts of things. There can be no such thing as a clean technology. There can, however, be a cleaner technology. I would argue that the criteria for progress should be creating fewer problems than those that exist in the real world. You need to look at all the impacts of those technologies, their costs, and whether they're really having an impact on carbon emissions.

So there can be cleaner technologies, but you need to look at the whole picture, not just at whether they're renewable but also whether they're creating fewer problems than those that existed before.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Stetski.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Thank you.

I hope to get in questions with all of you.

I'll start with you, Ms. Brownlee. Where do you think the low-hanging fruit is for the clean technology sector that the government should support and from which we can potentially see some good results? Mr. Cannings has talked to a lot of people in the tech sector, and electrification keeps coming up as perhaps one of the options that can be improved.

[Michelle Brownlee]

I won't point to specific technologies as the ones to invest in. I don't think that's the role of government at all. I think the role of government is to create the market conditions where those technologies will bubble up and come forward.

That said, there's a lot of evidence that when you do have some activity around a technology or a technology space, there can be a role for government to help accelerate that by creating a cluster or a hub or some kind of critical mass. The nice thing about Canada is that we have so many regional differences and strengths and weaknesses in different places of the country. I would argue that the provinces know best, and the industries and different areas know best, what the technologies might be, whether it be energy storage in Ontario or waste in Nova Scotia. It's where there is already some advantage in terms of economic opportunity and a healthy resource sector already that the innovation tends to happen.

I would argue that the government can deal with some of these market barriers and market failures and then let those technologies come forward, playing to the strengths of each of our regions.