Natural Resources Committee on April 4th, 2017

[Alison Thompson]

As much as MP Barlow was bringing forth the idea of abandoned wells, and I expanded that to mean orphaned and suspended wells, mines are.... Cumberland Energy Authority in Nova Scotia is actually Canada's premier example of repurposing an old mine. We have thousands of mines. They're not very hot, but we all know that they fill up with water. When they fill up with water, because that water is terrestrial, coming from the earth, it is actually about 30°C, and 30°C is all you need for heating.

We don't necessarily want to make power everywhere. I think wind and solar are doing a wonderful job helping us transition to renewable electricity, but renewable heat is something that we're not addressing at all. In fact, we're actually pumping it and paying to dispose of it, as you know, from abandoned mines.

Working mines and abandoned mines are some of the lowest-hanging fruits we could go after. The towns are in place. The customers are in place. We've already drilled, in some cases, or done open-pit mines. We've flooded the mines and are pumping to get rid of it. Now you need one piece of equipment, which is a heat exchanger, to take the heat from that water and put it to purposeful use.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Strahl, you have five minutes.

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

Thank you very much, Mr. Chair.

As you can see, for our side of the table this is a very popular panel. We have a few extra members. Mr. Zimmer, Mr. Kitchen, and Mr. Eglinski have joined us today of their own accord, just out of interest for this file.

We had previous testimony from other witnesses. Before I quote from Dr. Pierre Desrochers, perhaps I'll start with what Mr. Jeneroux said in his release when he introduced his motion, “Geothermal is the most affordable renewable source of energy with a per-kWh cost half of hydroelectric or wind.”

Dr. Desrochers, in his testimony before this committee, said:

...if there were promising technologies, plenty of venture capitalists and investors would invest in those things. I don't believe government funding overall is very significant in terms of funding innovation for promising technologies. If you look at the history of the development of greener technology practices, as soon as something looks really promising, capital will flow. That won't be a problem.

To both witnesses, is government intervention required? If these are good ideas that companies will benefit from, why haven't the private sector companies themselves made these investments already?

[Alison Thompson]

Would you like to go first?

[Steven Martin]

Sure.

First of all, I would disagree outright with the conclusion. “If you build it, they will come” is sort of the theory. That's not been my experience in fibre optics and it's not my experience in this.

There has to be a clear understanding of how the dollars will be returned before anybody will jump in. The cost of coming in second is far less than the cost of failure, being first. Realistically, this is true for mature technologies. Once something is well understood, where everybody knows the costs and what will be required to implement it, then absolutely; when that is done, all the bankers are knocking on your door trying to hand you money to go to the next step. It's when you have the nascent technology, where it's proven at some level—whatever that level is—that you end up with this chicken-egg problem. You're told, “Just prove to me that it works, and then I'll invest.” If you tell them you need their investment to finish proving that it will work, they'll just tell you, “Come back when it's proven.”

That's the reality of being an entrepreneur in this field. It's not just with this technology. I would argue that innovation across the board has always suffered from that. I think direct government intervention at an early stage would be beneficial to government in terms of developing new technologies, and also to industry in terms of getting those technologies implemented more quickly.

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

I guess as my follow-up to that, the budget was deemed an innovation budget by the government. In advance of that someone did an analysis of the plethora of government programs that specifically claim to deal with innovation and the billions of dollars of funding available.

If governments of all political stripes have utterly failed...knowing the issue, knowing about the valley of death, as we've heard it explained. If money was the issue and if well-meaning programs were the solution, surely we would have reached it by now. I'm frustrated, because it seems like we're the hamster in the wheel here, running around trying to find a solution. Clearly the money has been there. The political will has been there but it hasn't resulted in getting companies over that gap.

[Steven Martin]

I think government finds itself in a difficult position. Innovation as a sort of science is misunderstood entirely.

There's this view that innovation equals invention It's promulgated in the popular media. We watch Dragons' Den, somebody has a better mouse trap, “Give me money, we'll move forward.” It has nothing to do with innovation. Innovation is slog; it takes decades to get from beginning to end.

The work that we are doing at my company began in the United States in the 1970s and ended in 1998, when the U.S. government declared that, well, you know, we don't need this because there's an infinite amount of oil and it's always going to be $10 a barrel, so why bother with this biofuel mess that you're dealing with?

It sat on the shelf for 10 more years. I discovered reading the Washington Post, and decided I was going to try to do it. Lots of people have tried what we're doing, we've just gotten the furthest.

There's this idea amongst legislators that they can legislate innovation. On Thursday, we will all be creative and we will all find a solution, and this will result in the next generation of jobs. That's kind of not how it works. There are innovation investment models that do work. The problem is that they're unfortunately difficult for governments to adopt, because they require a lot of failure, and governments don't really like failure on their investments.

I don't think the understanding is there that there is no failure in innovation. What you have is a lack of success, which is very different. If government were willing to lose money on its investments in innovation, it would be much more successful in achieving the innovation it seeks. That's not how programs are designed. They're designed so that they have....As keepers of the public purse, quite correctly, government works hard to make sure it is not throwing good money after bad, but most innovation occurs by throwing good money after bad.

[The Chair, Liberal, James Maloney]

Thank you very much.

Mr. Lemieux.

[Alison Thompson]

May I make one comment on that?

[The Chair, Liberal, James Maloney]

I apologize, we have time limits we have to follow.

Mr. Lemieux

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

Thank you, Mr. Chair.

Ms. Thompson, I'm going to let you finish your answer because it was quite interesting.

We are all ears.

[Alison Thompson]

It's the same question, really fast?

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

Yes.

[Alison Thompson]

Emphatically, I disagree with your witness, because clearly this is not a level playing field, when I can show you that we don't have the same provisions in place as the other renewables, or as oil and gas, and yet I have all of these members.

All of these members are not making any money, but they know how to do it. They've brought their enthusiasm, they've brought their prospecting, they brought their technology, and they brought their financiers as well, but they can't spend a dollar, because they can't get the permit. They can't get the actual right to tap into the resource, and so we need to level the playing field.

The other thing that's a bit of a punch line here is that on this slide we have done all these things in Canada for the oil and gas industry. We already know how to do it, we know how to provide that incentive, but we can't take geothermal energy with all the promise of jobs and food security, electricity and heat, and give it one thing in the budget, but then leave out all the other things that would bring it parity.

Now, we're going to be cherry-picking. We made great strides in getting the ability to have renewable heat classified as renewable energy from geothermal, but we can't leave out all the other parity pieces that the other renewables, oil and gas, get, There needs to be a focus group, and a sweep of dealing with geothermal in the sense of bringing it as a credible energy form the way that many European and other countries have that are combatting climate change, but at the same time creating jobs and doing it in a sustainable way.

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

Thank you.

In fact, we saw that quite clearly in the oil sector. The research done in eastern Canada helped people in the region realize that it was absolutely unacceptable for Canada to have dirty oil. Research has shown us that we are one of the cleanest oil producers in the world.

My first question is for Mr. Martin.

Mr. Martin, I'm very interested in your work. Have you explored the possibility of using algae to produce renewable natural gas?

[Steven Martin]

I apologize, I got some of it, but my French is not good enough.

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

I'm very interested in the work you do. I'd like to know whether you've explored the possibility of producing natural gas renewably using algae.

[Steven Martin]

Yes, we have.

In a previous innovation effort, we were working on gasification of various biomass materials using some fancy technology. Algae, as it turns out, is a perfect feedstock for gasification technology, so producing a synthetic natural gas, SNG, or a natural gas-type product, a gasified fuel, is actually very effective.

Additionally, the algae does ferment very well. I know, I made wine for my staff at one point. It worked really well. There is a plethora of opportunities for algae. It's a fairly ubiquitous product.

One of the very big interests for folks on the oil sands is for site remediation. As I understand, Alberta has quite a big overhang in terms of remediation that's carried on their books—$36 billion-plus. Algae can form the organic phase to make the boreal forest come back after the mining operation ceases, so it's a pretty big play in terms of its capacity.

It's also a perfect animal feed, in terms of food security. The by-product we make is consumable by livestock basically, which is a very good thing for us, rather than relying on unsustainable sources of protein from South America, such as anchovy stocks.

There is a pile of different applications we can use, and natural gas is certainly one of them.

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

You know, Canada actually produces a surplus of natural gas. We are currently working on projects to export liquefied natural gas. Just imagine how incredible it would be for Canada if we could export liquefied natural gas that was renewable.

[Steven Martin]

Yes, very much so. Algae, in essence, becomes a bit of a currency of energy, because the algae itself can produce these different products, which include a direct biofuel—biodiesel. You can gasify it to make these various other products as well. So yes, I would agree.

Additionally, by implementing the technology on a cement plant, for example, the manufacture of one tonne of cement releases about one tonne of CO2 just in making it. Human beings are actually in the business of not making steel or cement or food; we're in the business of making CO2. If there is a way you can take that carbon dioxide and reuse it, which is what the algae does for us, you're really in business.

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

As I see it, the work you are doing in this sector has a very bright future.

I'd also like to hear from our two witnesses on the repercussions that the new carbon tax will have on the development and implementation of their technologies, both geothermal and algae-based.

[Alison Thompson]

People in Alberta woke up on January 1 and had to pay a carbon tax for their home heating needs. B.C. has already had a carbon tax for fuels such as natural gas or propane or diesel.

One of the issues is that we haven't given consumers a choice. You can pay a carbon tax and keep on supporting a fossil fuel-based industry, or you could have purchased renewable heat, but we haven't yet caught up to being able to supply renewable heat, so consumers are stuck with having to pay a carbon tax.

What we like to show is that we can compete at a lower cost and have no exposure to a growing carbon tax or to commodity fluctuations, because we're more like a utility, in that what comes up, Mother Nature provides for millennia. It never runs out, so we can have very, very stable prices.

I think it's a bit challenging for consumers to have to pay a carbon tax when they would choose not to and to use a renewable alternative. We haven't yet had enough demonstration projects or build-out for them to actually make that choice. I think many consumers, especially when they're modelling what their costs may be in the future, would choose something renewable that, again, has no exposure to carbon tax and no commodity price risk.

[The Chair, Liberal, James Maloney]

Thank you.

I'm going to have to stop you there, unfortunately.

Ms. Stubbs.

[Shannon Stubbs, Conservative, Lakeland, AB]

My colleague Jim will speak.

[Jim Eglinski, Conservative, Yellowhead, AB]

Thank you, Mr. Chair.

Welcome, Alison, Alex, and Steve.

Alison, we spoke briefly just before you sat down. One of your co-partners, Epoch, is working very closely with a community in Yellowhead called Hinton.

I wonder if you could explain to the committee the potential of some of our abandoned wells. Right around the town of Hinton, we have a number of old abandoned gas wells, which have tremendous heat in them, enough to operate a steam turbine. I wonder if you could maybe update them.

Before you go there, to kind of bring it to where we could go as a government in leading this technology, the federal park, Jasper, has to replace its power generation. They're going to close down their current system, from which they produce power on site, and they're going on the grid. For the grid, the closest place they can go is to the community of Hinton itself, which has the potential to geothermally produce electricity. Maybe you could take it from there.