Natural Resources Committee on April 4th, 2017

[The Chair, Liberal, James Maloney]

Good afternoon everybody.

Thank you to our witnesses Mr. Martin, Ms. Thompson, and Mr. Kent for joining us this afternoon. I apologize for the delay; we had some votes in the House. We're going to jump right into things now.

Each group has up to 10 minutes to present, to be followed by a round of questions. There are earpieces available if you need interpretation services. You will almost certainly be asked questions in both official languages, and of course you're welcome to answer questions or deliver your remarks in either.

Mr. Martin, we will start with you. I'll start on my right and open the floor with you.

[Steven Martin, Chief Executive Officer, Pond Technologies Inc.]

My name is Steve Martin. I'm the founder and CEO of a company called Pond Technologies. I have to confess, I may have misunderstood the format of this presentation a little bit, from the discussion I had earlier. My impression was that we were meant to discuss sort of broadly those kinds of innovation vehicles and policy instruments that could be implemented by government to help assist the adoption of new and sustainable technologies.

In that regard, my impression was that it was to be more of a discussion than a formal presentation. I do have a formal presentation, which I can give, but I think it would be more useful if you heard my comments more directly from someone who's doing innovation on a daily basis, developing technologies that can help the environment.

My company, Pond Technologies, uses algae to mitigate carbon emissions from smokestacks. We take untreated stack gas emissions and put them through bioreactors that were designed and built in this country, using technology that actually came out of the fibre optic industry a number of years ago.

Surprising as it may seem, the key technology that we have came from a heads-up display of a fighter jet, designed by me about 20 years ago. That technology allows us to grow algae, strange as it sounds, faster than anyone else, and to take carbon emissions out of any arbitrary smokestack and turn them into something that's green, literally.

The algae that results is useful for any number of purposes. It's a very high protein animal feed; it can be used for soil amendment; and it can be used for biofuel.

We have a number of partners across the country that include Canadian Natural Resources on the oil sands. Most importantly, our partner is the National Research Council of Canada, through the algae carbon conversion program announced a number of years ago. We are the sole technology provider to that program.

We have an ongoing demonstration site at St. Marys Cement in Ontario, where their stack emits over half a million tonnes of carbon dioxide per year. We're able to take a small portion of that—small because of some of the impediments in existence for innovation adoption—and turn it literally into a green product. The National Research Council participates with us on that.

In answering the questions that were presented to me, I was asked what the risks were that government could take on within its jurisdiction to help with the adoption of clean technologies. One of the things I like to say is that industry is very much looking to adopt clean technologies. It just has to make financial sense.

One of the unfortunately realities is that, in the absence of regulations or other instruments wielded by government, there is nothing cheaper than polluting. The cheapest thing you can do is pollute, and accountants like cheap things.

If the government has an opportunity to implement real taxation, carbon pricing, or something in a universal way that doesn't impede industry but in fact rewards the adoption of new innovations, I think you'll find very willing participants across all the jurisdictions that you oversee.

We are not limited to our work with Canadian Natural Resources, the National Research Council, and St. Marys Cement. We have also worked with U. S. Steel Canada, now Stelco, and we've also used our technology on very small combined heat and power plants. Our solution is applicable across the board, but we're only one part of an ecosystem of solutions that are available to help mitigate carbon emissions.

The next question I was asked was what the best practice policy instruments are for de-risking clean technology in the natural resource sector. I would say it is a direct understanding of the limited capital available for implementing technologies.

All of the large final emitters across this country, resource-based or otherwise, exist in largely commodity-based industries. They're squeezed at both ends. They don't have free capital for implementing technologies, particularly if they're new.

We have a solution that works. It has been validated. The National Research Council is behind us. We are semi-finalists in the Carbon XPRIZE. We're recipients of many government dollars in terms of support. There is still a barrier to the application of our technology for industry. They just can't bear the cost.

The term best practice implies that there's an answer. I don't think there is a best practice; I think there are practices.

In terms of looking at new policy instruments, governments need to be very open-minded, see what other jurisdictions have done, and be flexible. Do what works, drop what doesn't, and don't stick to any one plan. I think the best policy in this case would be to be innovative.

I was asked what instruments exist in Canada. There are direct taxation and carbon pricing, either implemented or proposed. The direct taxation, as it was implemented in British Columbia, gutted the cement industry. I don't think that was the intention, but it nevertheless did it. Whether that had a positive impact on environment or not due to reducing carbon emissions is questionable. It's not really known to me if that's the right way to go; nevertheless, that is one of the instruments the government has.

Regulations in general have to exist, though, within the confines of what's available to industry. We could simply regulate now that industry no longer emit carbon, but we all know that what you're doing is regulating them out of business, so there has to be a way to foster innovation.

One of the things that's come up in my own company—and we've raised tens of millions of dollars—is that government likes to invest in new technologies. They're terrific. One of the problems is that government wants to be the last dollar in. There's a dearth of investment in Canada in technologies. It's been the same for years. When fibre optics exploded, we found this technology to be very interesting to Canadians, and we developed many companies that were very good. Since then, however, we have been really good at investing in mines.

When I go out to seek investment, I meet with investment bankers, and they say to me, “You're not a mine.” I say, “No, we do technology. We can help the mining industry.” They say, “That's fantastic, but you're not a mine. We don't have models to invest in you. We don't really know what we're doing.” If there were a government program or a government initiative that could encourage investment at the front end—and I'm not talking about dollar-for-dollar matching, I'm talking about venture capital from government—that would be very helpful.

What institutions can the federal government leverage to de-risk clean technology adoption by natural resource firms? I'll tell you: the National Research Council. They've been an extraordinary group of people to work with. I can't believe the researchers they have there. Industry—and you probably hear it a lot—does not have a very high expectation for government in terms of their productivity and what they're doing. I think that's entirely wrong, as evidenced by the work done by the NRC. I've never worked with a bunch of people who were as good at what they're doing. They have a 60-plus year history in doing the work that I do. I discovered them by accident. Any support that can be provided to the National Research Council....

One of the things I would recommend for this committee is to start to advertise what they do. When I go to meet with investment bankers and I say, “We work with the NRC”, they say, “Who's that?” That's a big problem. It's a billion-dollar organization with 4,000 researchers who are very good at their jobs.

The last thing is what recommendations I have for the Government of Canada that the committee should consider for their final report. I think they should consider an ongoing consultation with heavy industry, the people who know what they're doing in terms of emitting carbon and what they have to do in terms of the realities of business. If you can have a permanent committee that looks at these regulations and is quite flexible in how they move forward, you'd be well served.

I would say that's the end of my little monologue.

[The Chair, Liberal, James Maloney]

Perfect. Thank you, Mr. Martin.

Ms. Thompson.

[Alison Thompson, Chair of the Board, Canadian Geothermal Energy Association]

Thank you for inviting the Canadian Geothermal Energy Association. We call ourselves CanGEA.

I'll be presenting on behalf of CanGEA. I'm with my colleague Alex Kent, who is the policy manager. I'm the chair of the association.

Bonjour from our membership. I'm excited to see here so many of the MPs from our constituents' project bases. Right now, we have projects in Saskatchewan, the Northwest Territories, Yukon, Alberta, British Columbia, and Nova Scotia, so we truly are a pan-Canadian resource.

We also represent the whole supply chain. When you look at our membership, as shown on our slide, you'll see that we have everybody from the explorationists' side and the engineering to the people who drill the wells, as well as the accountants, financiers, and lawyers, and also the people who build turbines, equipment, and piping. If you didn't know that I was talking about geothermal, you might think that I was talking about oil and gas. That's one of our main comments today. Through the energy transition, it's about looking at what geothermal can do not just for the renewable economy, but also in terms of a job transition economy for out-of-work oil and gas workers across the country.

One of the things we find, though, is that most people just don't understand what geothermal is. It's hard to understand the promise of geothermal if we don't yet know how it can be used. The slide in front of you now is a really quick snapshot of the different types of geothermal.

One of the first things we say is that geothermal itself has a really bad name. As an industry for oil and gas, we have become more sophisticated, and now people don't really call it “oil and gas”. We'll maybe call it “tight oil”, “oil shale”, “oil sands”, “sour gas”, or even “peat moss” or “coal”. Think about all the different types of hydrocarbons. They all exist in different types of rock. All the different hydrocarbons are also harnessed by different technologies and at different costs.

For geothermal itself, we're disfavouring ourselves, really, by using just that one word “geothermal”, because what we really mean to say is that geothermal can be many things. Later, I'll have a slide showing where it exists across Canada.

Like the oil and gas industry or the coal industry, we do need a bit of a specialized policy because, again, we need different technologies, and there are different costs to harness them. The best thing to know about geothermal is that we're not just about electricity. Canada is actually doing a wonderful job with renewable energy. Usually when people are talking about renewable energy, they mean renewable electricity, but we also offer renewable heat. I'll go into what renewable heat is.

We have three advantages. The first one would be heat. Heat itself is a larger market in Canada than electricity is. I've mentioned that we are doing I think quite a good job with renewable electricity programs, but we've barely scratched the surface for renewable heat, if at all.

We can look at the statistics. About a quarter of all energy used in Canada is non-fossil-fuel based, so that's a renewable base. Our market share would be about 75% more to support more renewable electricity and heat. We can look at an average household. They spend more money on heat than they do on electricity.

In the north, almost all of their heat comes from oil or diesel. You hear about ice roads or people flying in diesel. It's quite polluting to have a diesel generator, and it's noisy. Also, of course, it's just giving us that one product: it's either electricity or heat.

With geothermal, though, we can have micro power plants that are the right size for communities and for small communities in the north. We can provide all the power they need, as well as all the heat they need. We can right-size these projects across Canada as well.

I don't think that geothermal will be a large electricity-based utility, but in places that are looking for both electricity and heat, our “co-gen” makes us very affordable and also gives two products.

If you're thinking about why we haven't heard about this in Canada, just this morning, Paris, France, announced another 200,000 homes right in the city of Paris that will be converting to renewable geothermal heat from natural gas. Right now, in terms of geothermal heat progressing in their city, they're about 30 years in. France itself has very supportive policies, which we'll talk about later in the presentation. Poland also announced just this morning that 30% of their country can be heated by geothermal heat.

While we don't know very much about it in Canada, the industry itself is over 100 years old. There are 80 countries around the world, many of them in Europe, that are using renewable heat from geothermal. Around the world, about 25 of them use it for electricity.

Of course it's wonderful to have climate change mitigation methods and get off fossil fuels. The natural gas industry might say it can take care of that and burn natural gas and it's clean burning. However, we can do all the things that natural gas does at a similar price; do it at a renewable, sustainable level with no emissions; and give jobs as well. Canada itself has grown up as an oil and gas country over the past almost 100 years, and we have a lot of stock built up in human capital. People have gone to university; they've had jobs; they've trained maybe as a geophysicist or a geologist or a pipeliner, and it's hard to ask them to retrain to be a dentist. These people are the best at what they do and better than in most other countries in the oil and gas industry, and that technology and expertise exists in Canada.

Our energy forum maps 100% on oil and gas so you will find all those professions in oil and gas can also be deployed in geothermal. The best part is shown on this graph, and these graphs are not CanGEA statistics. With the industry being so emergent in Canada, we have to rely upon other countries; we're speaking about France, Germany, and the U.S.A. You can see in the slide about jobs that for the same amount of heat or electricity output several times more jobs are created, and again, the right type of jobs in the professions: geologists, geophysicists, geoscientists, drillers, pipeliners, tradespeople, field staff. You can have your cake and eat it too, which is what the other countries are finding. We're thrilled to have a very close partnership with the oil and gas industry. They don't see us a threat; workers themselves see us as the next step in their career. Certainly our industry couldn't even exist at the technological level that we have had the oil and gas industry not come first. We're not here to shame the oil and gas industry; we're here to stand on their shoulders and take Canada in the same direction using the skilled workers toward a more renewable and sustainable, and we believe lower-cost, future.

Another advantage, of course, is what do you do with all this heat? You may hear in the wind industry or the solar industry that sometimes there's too much of it and at other times there's not enough of it on the grid. It's the same thing with geothermal; there's so much of it that when you drill a well, you often have to find things to do with the heat. That's why you don't just need the engineers; you need the entrepreneurs. We need the people who are the imagineers to figure out what they might do commercially with heat. We think one of the most poignant things that Canadians can think about with this excess amount of heat from these drilled wells would be to use it for food; especially in the north where there are issues of food affordability, food diversity, and food security. Imagine having a well, and it just takes one well, in every northern community—and there are over 200—that are now able to provide heat economically to a greenhouse or a fish farm or any other imaginable thing they would like to do commercially in their village. We know how to drill wells; we have all the infrastructure and all the drilling rigs and all the personnel. The technology is not the barrier. At times, cost could be a barrier but with the carbon tax in Canada, as well as people just simply saying no to fossil fuels, this comes into play. Again, even before the Paris agreement, these other countries around the world had been aggressively building their geothermal for things like food security, jobs, and food diversity for over 100 years.

We believe this is not just a Natural Resources Canada issue. This could be an agriculture issue as well; something we could all agree on. Here you have an energy form that is liked by the oil and gas industry, the workers, NRCan and Environment Canada, agriculture, and of course, the ministry of northern affairs as well.

Why are we not doing this more in Canada? Simply, like many things, as our colleague Steven just said, sometimes policies stand in the way. We have an associate here in the room today who wrote one of these reports and this is the “International Geothermal Policy Mechanisms Best Practices”. Again, we can stand on the shoulders of other countries that have already gone further. We have excellent resources in Canada; that's not the issue. We have excellent technology in Canada, and we have the people to do it. We're coming up against the policy disparity. We don't quite have the things in place to help either bring people awareness about what geothermal can do or how we can help foster it. Looking at international policy, we have CanGEA reports and we also have European Union reports. They're all pointing to how to support geothermal energy to get going.

We went through the benefits, that geothermal gives not just electricity but heat. We talked about the jobs, we talked about food. I now have three areas of policy I'd like to go through.

Supportive technologies would be having things like the geological survey of Canada and CanMET Energy support more demonstration and de-risking for the industry in the same fashion they have for oil and gas in the past.

We also have the financing tools. Two weeks ago in the budget we saw that geothermal heat is now considered a renewable resource. However, there are at least four or five other things we do not have parity with. They're pretty basic things—things that oil and gas, or wind and solar, already have. These are things like the Canadian resource property, the ability to claim test equipment, the ability to use transmission expenses as eligible expenses, and having supportive incentives such as the wind power production incentive program, which later became the renewable power production incentive and then became the ecoENERGY innovation initiative program. These are things that our industry, geothermal, missed out on. We call that the activation energy that's missing.

For financing tools, we're also looking for low-interest loans or grants that convert into low-interest loans if we're successful. A large one the federal government and the provincial and territorial governments could do right now would be to buy renewable heat. Most of the bills for energy are not actually electricity, they're for heat. One way the government can step in right now is to create a market for our members that have several projects in the pipeline, to get them off the ground.

In North America, America is a number one producer, Mexico is now the number five producer, and Canada still stands pretty much at zero on the world scene. We do have lots of heat available. We just need to go after it with our skilled workforce and take advantage of that resource.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much.

Mr. Harvey.

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

Thank you, Mr. Chair.

I want to start by touching on something that Ms. Thompson said. I agree with you 100% on the future of central-based heating. That's something we've seen a shift away from in North America over the last 75 years or 100 years, the idea of central heating projects, which is something that's broadly accepted and has actually flourished in Europe. This is something I think we need to pursue as a country. The financial viability of central heating is there—right there for the taking. Whether it's done through geothermal or other means, that's up for debate. I'm just saying I totally agree with the theory in general. That's really not my question, though. You caught my eye on that, so I just wanted to say it.

I want to talk with you, Mr. Martin, about the implementation of your technology. At what stage is your technology now, the algae growth technology? Where would you say you are in the development chain?

[Steven Martin]

We're ready for commercial deployment. We've done a full-scale commercial demonstration at U.S. Steel Canada and have achieved commercial growth rates. You mentioned combined heat and power plants. Markham District Energy Inc. is a combined heat and power plant system, and we are a partner with them. They're a Carbon XPRIZE co-contestant with us. Our technology's applicable to that as well.

The issue is that it is a capital-intensive technology. Everybody's racing and everybody wants to be first to be second. If I'm a decision-maker in a large final emitter—say, I work for a cement company—and I'm making a decision, what I really want to see is a full-scale commercial implementation someplace else I can point to. The fact that I'm an early adopter is not really recognized by me, as a professional working in the field, as anything advantageous. It's just a risk. If I'm a middle manager making a decision on whether I'm going to put in a more efficient pump or invest in an algae plant, even though the algae plant has a thousand times the impact, I know I'm not going to get fired if I implement the pump. That's a little bit of the reality we work with. There is a race to be second, not to be first.

Having said all of that, I can tell you that we have a project under consideration with the Ontario Centres of Excellence that includes Stelco—it was U. S. Steel, but is now Stelco—and we will be building the first commercial-scale plant, we hope, in Hamilton over the next couple of years.

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

In terms of decarbonization, what's the percentage, roughly, of the amount of carbon you remove from the emissions when you deploy this technology?

[Steven Martin]

It depends on how much you put in. The only source of carbon for the algae to grow is the carbon that comes out of the stack gas. Importantly, we take the untreated stack gas emission. We don't just take carbon dioxide—we take the oxides of nitrogen, the sulphur, the volatile organics, and the algae eats it all.

One of the interesting things is that we talk about an oil and gas industry in Canada, and what we're actually talking about is an algae industry. I'm kind of old, so they taught me in school that it was dinosaurs, and they even showed me the pictures of oil domes with dinosaur bones and ferns. It's all algae. All the oil, coal, the natural gas—it all started out as algae, which makes a lot of sense. Algae grows, dies, ends up at the bottom. A layer of silt forms and you get an oil dome. What we're doing is short-circuiting that, and we're just doing it industrially and quickly.

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

Bearing that in mind, I understand that the costs are large, but how do the costs compare to the profits?

[Steven Martin]

We make money, but one of the interesting little asides is that the algae has value. It's worth $2,000 to $200,000 per tonne, depending on what you're growing and what the use is.

Human nutraceuticals are up to $6 million a tonne. You can't grow that on a stack gas, but the same technology allows you to do it. The issue is that the capital costs are very high.

If we compare ourselves to carbon capture and sequestration, we're about one-fourth the cost. We're a quarter of what it costs for a similar capacity of carbon capture and sequestration, but if you're looking at carbon capture and sequestration it's normally co-located within enhanced oil and gas recovery, which is where the real value is derived. I think it's actually quite a sensible solution.

I see ourselves as part of an ecosystem of solutions, not a single source. I have nothing against carbon capture and sequestration. I think it's actually very smart.

Weaning ourselves off an oil economy may take time. Again, I'm also not here to denigrate the oil economy. I think it's terrific.

What we need to do is close the carbon loop, and that's what we can do.

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

Absolutely. In terms of tools that the federal government or provincial governments can provide to assist companies in getting over that “valley of death” or the significant capital that it takes to get from the step you're at to the next stage, what are your recommendations? What do you see are the most viable for you?

[Steven Martin]

The most viable for me would be direct investment, if governments were in a position to make a direct equity investment into technology. I mean equity investment. I don't mean a forgivable loan or grant; I mean a direct equity investment. Become a stakeholder. Become a partner with us. Bet on somebody. Bet on a technology.

If that's not possible—and it may not be, and it may not make sense for a government to be doing that—then there are other tools. The next step down would be things like grants to implement the technology on a larger scale, and coming in early rather than coming in late.

As I said, in many cases government doesn't want its money matched by private money. It wants it the other way around. If government could lead with the investment rather than following private investment, that would be very helpful.

There are some things that are quite inexpensive for government to do. If government could promote its successes.... I've mentioned the National Research Council several times. My company wouldn't exist without the National Research Council, and it was sheer luck that I met them at a conference in Israel. What they were doing—their 60-year history of growing algae, the stuff that we do for our business every day—was unknown to me. In fact, I'm not alone. It was unknown to a lot of people, and they're the best at it there is.

If that could be celebrated a little bit more, so that when I meet with a banker who's looking for due diligence sorts of markers and things they can do for validation and I say I work with the NRC , if I didn't have to follow that up with a 10-minute explanation of who they are, that would be very helpful.

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

You mentioned an ongoing conversation with heavy industry. In terms of technology development and the path forward, can you offer some thoughts on that? If we don't have time now, then maybe somebody else will pick it up later.

[The Chair, Liberal, James Maloney]

Take a very, very quick shot at it.

[Steven Martin]

I can take a very quick shot. When we present our technology to the industry, it's not as though people say no. They say yes, and they say yes very quickly.

We have relationships with Canadian Natural Resources, with U.S. Steel Canada, or now Stelco, and St Marys Cement, which is part of a large international conglomerate called Votorantim based in Brazil. It's actually our single largest shareholder and investor.

It's not as though there's an unwillingness to look at the technology. The rub is that industry moves very slowly. It takes it a long time to implement.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Barlow.

[John Barlow, Conservative, Foothills, AB]

Thank you very much to our witnesses for being here with us today.

Your timing is excellent. Certainly over the last several months my Alberta colleagues and I, including Ms. Stubbs, did an Alberta jobs task force. One of the ones who spearheaded that was the member of Parliament for Edmonton Riverbend, Matt Jeneroux.

We had a lot of discussions and feedback from that. One of those topics that came up a great deal was diversifying Alberta's economy and creating jobs. One of the things that Mr. Jeneroux really pushed forward was the potential on the geothermal side. Actually well before the budget, he had tabled Motion No. 122, which was asking the government to support regulations and policy changes to encourage geothermal development in Canada.

I recall Matt actually saying we're one of the only...or maybe the only Pacific Rim country that doesn't produce electricity from geothermal energy, which I should have known. We should have known that, Alison.

What Matt was talking about and what we heard from a lot of our constituents during the Alberta jobs task force round tables was about the ability or the potential for geothermal to address the more than 80,000 plus abandoned oil wells that we have in Alberta as a way to potentially turn them into electricity-producing projects or some ways to address that, create jobs and also maybe address an environmental concern. You didn't have a chance to talk about that. Is that a potential there, Ms. Thompson? Is that something that geothermal can do?

[Alison Thompson]

I want to maybe broaden the discussion to include Ontario, Saskatchewan, Alberta, northeast B.C., and wherever we have a robust oil and gas industry.

MP Barlow, we just talked about abandoned wells. Abandoned wells, or end-of-life wells, have actually been cemented. There's been money spent on them to put them to rest. Before they get to be abandoned, they're producing, so one of the easiest things to do is co-production. Have your cake and eat it too. Have the oil and gas still being produced and—as opposed to using the waste water as a waste and having to pay money to dispose of the waste hot water—actually use that hot water.

You can pipe hot water and keep its heat anywhere from three to 10 kilometres, but of course the piping costs would be fairly high, or you can bring people to your wells. If you think about these oil and gas wells, they're already on farmers' fields. They're not in urban centres. They're in the agricultural areas of our country. Asking the agriculture industry to do more with what is already on their land to begin with, through co-production, would be a wonderfully low-hanging-fruit activity. It would increase the economy of the wells. Now they're not just selling oil and gas, they're probably selling CO2 credits as well as the heat, and also perhaps paying the farmer some more royalties or rent for the infrastructure on their land.

Before we get to the abandoned ones, though, what happens with an oil and gas well is that if a company goes bankrupt—and there's lots of that going on right now—or even if the well itself waters out and it's the end of the life, they become suspended and possibly even orphaned. Those wells are still viable candidates, but the ownership or the economics can slip below zero. They're now negative. The idea of bringing the suspended and orphaned wells back to life by using them as renewable heat wells, or perhaps even electricity wells, just allows that infrastructure to be repurposed and those employees who are already working on the well to go back to their jobs.

Abandoned wells are a subset, but they're actually probably the hardest thing to do. They could be done once we get a vibrant industry going, with the co-production and the suspended and orphaned wells, which are growing in numbers as well—I think now we probably have more suspended wells than we do abandoned wells. Attacking that allows us to reimagine and rethink infrastructure.

Again, we can use those exact same workers. For sure, we can do it in Alberta—and we thank MP Jeneroux for having the foresight to represent that initiative—but it also can be used in Ontario, Saskatchewan, northeast B.C., and anywhere we have the oil and gas infrastructure right now.

[John Barlow, Conservative, Foothills, AB]

Thank you.

Certainly in my riding we have the Drake Landing development, which is Canada's first geothermal-powered subdivision, I guess. It's celebrating its 10th anniversary this year.

We had officials from Natural Resources Canada here earlier this year. I asked them about the potential for taking that technology to other areas. We just haven't really heard much about taking that model and moving it to other areas and to other jurisdictions to reuse.

Do you have any update on the success of the Drake Landing model? Has it shown that it's economically viable? Is there potential for it to be used in other communities? Are there other municipalities that are looking at that model to maybe use it in their jurisdictions as well?

[Alison Thompson]

Drake Landing is a hybrid. They collect solar energy and store it in a geothermal field. The field is very shallow. That technology is more properly described as geoexchange. The wells that they drill are really just exchanging energy between the solar energy that radiates down on earth and what the soil can absorb. They pass energy back to the houses when they need it in the winter, and they store it in the summer when there's excess sunshine and excess heat.

What we're speaking about, though, is actually drilling fit-for-purpose wells, or repurposing oil wells. Our typical depth is about three kilometres, so we're more akin to oil and gas, not necessarily urban activities where heat exchange is.... There are about 300 installations already across Canada, mostly in Ontario and Quebec.

Can we do more in heat exchange or geoexchange? Absolutely, but we're trying to imagine an entirely new industry—geothermal energy proper—which are these three-kilometre-deep wells. We go down to a reservoir of hot water, versus having to just store it in the shallow earth.

[John Barlow, Conservative, Foothills, AB]

Looking at your map, you showed some of the areas that had potential. Certainly, during our previous study on mining, one of the major issues that was brought up was that they rely on diesel power in some of these northern, remote communities.

What is the potential for geothermal to be able to replace that diesel as a more environmentally friendly power option? Do they have the potential to be able to power a mine? Is it something we're talking about? How far down the road is that? Is it possible?

[Alison Thompson]

I think this is really the crux of what makes our energy different because we have about 200 remote communities. Some of them are off-grid. Then we have the mining installations, and the mines themselves have a much bigger load than even the small communities. The small communities may have a megawatt or less. In some cases, they just have a number of hundreds of kilowatts.

Because we can attack both the electricity needs and the heat needs, you can get rid of diesel altogether. Right now when you have wind, solar, or battery storage, you still have to run diesel for heat. This technology, this renewable, allows you to do both heat and power, and it really does enable economies. Right now there is a carbon tax for mines. Obviously, we'd have to pay it if they're bringing in diesel. This avoids having to pay carbon tax but also avoids having to pay for two different infrastructures. Right now they have to pay for heating and for their processing, but as well there is electricity, and geothermal can take care of all of that.

We do have the technologies to drill those wells, and like any natural resource, some areas are a better geothermal resource than others. But Canadians—I say this with confidence—know how to drill. In that last cartoon about Iceland, they didn't even know how to drill. Now they have nine in 10 homes heated by geothermal. Now, they have great resources there. Maybe we have fewer great resources in Canada, but we have better talent in Canada in the intersection of our marginal resources and perhaps our better resources, but with that talent, that speaks to what the oil sands used to be. The oil sands are not the world's best, easiest oil to get out, but we applied technology to it in our skilled workforce. That's why I'm very confident we can apply our technology with our resources, no matter what quality they are and no matter where they exist in Canada. So mines, coupling us with other heavy industries.... We really are a solution, not just for communities, but for heavy industry as well.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you to all the witnesses for being here today.

Ms. Thompson, I'm quite surprised to see that geothermal does not qualify for the accelerated capital cost allowance, as wind does, nor the renewable and conservation expense, as other renewables, since clearly geothermal, to me, fits squarely in those categories.

Have you ever received a policy explanation from government as to why geothermal doesn't quality for those two tax credits?