Natural Resources Committee on April 4th, 2017

[Alison Thompson]

Please, Alex.

[Alex Kent, Policy Manager, Canadian Geothermal Energy Association]

To clarify, it's only a portion of those two tax credits that it doesn't qualify for. Within the ACCA transmission expenses, from speaking to persons at Natural Resources Canada, it's because the original Meager Creek test facility in southern British Columbia was too far to load, and that scared off the government from wanting to become a transmission company, paying for 200 or 300 kilometres of transmission. That is now not the case. In fact we're proposing that a lot of geothermal development can happen in communities, adjacent to communities, with minimal transmission distances because a valuable product is the heat, and you can't send that 200 kilometres.

The wind-powered test facility of the wind power industry did the legwork, and they told the government, Natural Resources Canada, why they needed it. They were excellent lobbyers and they got there first. They have to prospect an uncertain resource. They were able to demonstrate that the ability to claim their test equipment would materially benefit their industry. Now geothermal is making the same case. We have an uncertain resource. It's three kilometres beneath the surface. Just as we don't know when the wind blows, we don't know exactly how hot a reservoir is or how well it flows until we do it.

[Don Davies, NDP, Vancouver Kingsway, BC]

So you see no material difference that would justify the discrepancy between the way they are treated?

[Alex Kent]

Yes, I can go with that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Ms. Thompson, I want to ask you about geothermal in an urban environment. I live in Vancouver and I'm thinking of the possibilities of geothermal heating for Vancouver. Can you draw me a bit of a picture of how that would work in an urban environment? Where would the geothermal hole be drilled? What kind of area would that serve?

[Alison Thompson]

The best example to look at is what Paris is doing. Vancouver being on a tectonically active area, we definitely want to make sure that we are using geoscientists and that we are not overly stressing and causing seismic events, but with wells for heat you need only about 30°C. You can look at the slide I have up here. For power, you need to make steam, which then would turn a turbine, but for heat you're looking at just 30°C. That's about a kilometre deep, and when you're a kilometre deep you're not really into that seismically active zone.

What communities in Paris do is literally go to a street corner, or maybe a park, and set up a drilling rig. They have perfected how to drill within a tight area. You would drill down, and you would have infrastructure pipes going into the homes. It's better in apartment buildings. You don't really want to get into lots of pipes. Pipes will sink your economics. To your comment earlier, what you want to do is make it denser. In an urban environment, you really want to go after apartment buildings or large buildings, as opposed to individual homes. If you're going to do it more for individual homes, you really want to have an individual home and then another user, like a greenhouse or a fish farm. You need to do it more on a district heating basis.

We would suggest that new builds are far easier than retrofitting, because if it has already been piped one way, it's going to be very costly to install pipes. We definitely want to walk before we run, but with the explosion in growth in Toronto and Vancouver, there are lots of new builds to target.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[Alex Kent]

I'll qualify one thing. An old build can be put to a geothermal heating purpose if it already has a heat distribution plant, such as at a hospital or a university. It already has centralized heating, and it is a single, large client as well.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks.

Mr. Martin, what kind of energy input is required in order to transform carbon dioxide into other products using your method, and how does that compare to other energy sources?

[Steven Martin]

Obviously, we are using a photosynthetic process. We use light to trigger the photosynthetic reaction fixing the carbon. When the overall thing is done and we do the carbon balance, we have a net benefit in terms of carbon load, but that is jurisdictionally dependent. We do use electricity to pump, as well as to power certain aspects of the plant. If you are powered 100% on coal, it's probably unlikely that you're going to get much benefit from what we are doing. On the other hand, if you have a typical mix, as we do in Canada and most of the western world, you actually have a net carbon benefit. Additionally, you produce a product that has fixed the carbon.

There are some detailed studies we can provide, but you have a net carbon benefit from implementing the technology.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Martin, according to the briefing document that our analysts have prepared, your platform, which you just described, “uses the...photosynthesis process of algae to transform carbon dioxide...into algae-based bio-products, including biofuels.” What kinds of biofuels would this produce, and how do their emissions compare to other biofuels already on the market?

[Steven Martin]

The emissions are a little better. Essentially, you're going to end up with a synthetic diesel. It's a fatty acid methyl ester, FAME. Simple transesterification gets you biodiesel, but it's a second- or third-generation biodiesel, depending on how you look at it. Oil is squeezed out of the algae as any soy oil would be squeezed out of soy.

The remaining biomass can be used as a relatively mid-grade coal, around 9,000 BTUs per pound, but the emissions profile in both cases is better than the emissions profile you would typically find in a similar fossil-derived diesel, because there is less sulphur in it.

[Don Davies, NDP, Vancouver Kingsway, BC]

There has been reference to Canada having a cold climate and to some of the applications in cold weather parts of our country. We know that diesel fuel can gel in the deep cold. Are there any similar concerns with your product?

[Steven Martin]

You have a cloud point problem with biodiesel. The algae oil, as it comes out directly from the algae, can be used as a direct one-to-one substitute for diesel fuel in appropriate climates. In Canada, you have to do a transesterification reaction. It's relatively simple and straightforward. With the expertise in Canada, as we've heard, in terms of dealing with petroleum-like products, it is very easy for us to do that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Finally, back to you Ms. Thompson—

[The Chair, Liberal, James Maloney]

You're right on the button.

[Don Davies, NDP, Vancouver Kingsway, BC]

I guess I'm not back to you.

[The Chair, Liberal, James Maloney]

We will get back to you, though.

Mr. Serré, go ahead.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair.

I want to direct my first question to Mr. Martin. You talked about the National Research Council, with 4,000 researchers and $1 billion, and the need to promote the agency. We've heard this often. We have not done a good job overall in Canada of promoting our natural resources industry, and we need to do better.

I want to ask you whether you have any specific recommendations related to the National Research Council. Also, when you talk about your product being ready to be commercialized, do you have any recommendations especially linked to the mining industry?

[Steven Martin]

I'll start with the second half. We align very well with the mining industry. There was a question over there about fallow or end-of-life oil wells, etc. One of the very big interests that companies like Canadian Natural Resources Ltd. and Imaginea, a smaller oil player in the oil sands, have expressed is that we fit very well with their initiative to produce a lower carbon oil, something of great benefit to them. So we align very well. In terms of deployment, again, it's all about capital.

With respect to the National Research Council, I think their communication policy is poor. There's not much that they do in terms of self promotion. They have somewhere in the order of 7,500 Twitter followers. I'm not actually a major Twitter user myself, but I do understand that the kids like it. They could do a much better job of celebrating what they've done. There is this humility that seems to be built into all Canadians where we don't really like to stand up and say look at me, we do great work. They could do that more regularly and more continuously. Accounting associations promote themselves. Engineers promote themselves. The National Research Council doesn't do very much. I've never seen a commercial.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

Ms. Thompson, in your presentation you mentioned that the geothermal industry in the U.S. is a world leader. I think you said Mexico is number five. Could you give us a scope of the industry—the number of jobs, revenue—in the U.S. and also the scope in Canada currently?

[Alison Thompson]

We'll start with Canada. In the electricity industry there are currently zero megawatts of geothermal electricity. That hopefully will change very soon. There is a demonstration project planned for MP Zimmer's area and also for MP Nathan Cullen's area. There are two projects in B.C. that probably will get to electricity in the next couple of years. That would represent the first jobs.

Even though there is zero electricity being produced, there are tens of dozens of jobs that are already in the exploration phase. We talked about having explorationists, drillers, and all the financiers. So as an emerging industry, unfortunately right now in Canada we're still measured at below 1,000 jobs in geothermal.

In America and worldwide there are about 300,000 jobs in geothermal. We're still very niche, although we punch above our weight class in the sense that because we create those sophisticated, quality jobs, we don't have to retrain to be dentists, we can redeploy the geoscientists and geophysicists as well as involve the tradespeople. It's the quality of the jobs.

If we can get some megawatts purchased—both electricity and heat—we will actually start to outpace even the natural gas industry. We are a complete, 100% substitute, but we come with zero carbon footprint. We come with food and other security things that we can address, such as food diversity and the quality jobs. It's emerging, unfortunately, right now.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

I want to follow up on my colleague Mr. Barlow's question related to powering a mine site. Obviously when we look at the Ring of Fire in northern Ontario, we look at northern Canada, and the issue with diesel and the communities.... Mr. Barlow asked about how far are we or you? Are we three years away, 10 years away, from powering a mine site?

In the committee's last study, we had small module nuclear in looking at the possibilities in alternative for some of these remote areas. How far are we and what can the government or the National Research Council do to help implement that faster?

[Alison Thompson]

One of the things to understand is that, much like for oil and gas, the resource itself is governed by the province or territory. As much as what Enercan or the geological survey of Canada or CANMET can do, they can be supportive. We need your help to bring the provinces along at the same time. If they are the ones giving the permit for the resource, you can't drill without the provincial or territory permit.

British Columbia does have a Geothermal Resources Act, so companies like mine were able to get these permits and start financing and do the exploration.

For a mining company to also do geothermal, they'd have to go back to the territory or province and get that piece of paper that gives the company the exclusive use of the resource. For that privilege they may pay royalties as well, possibly to the federal government as well as to the provincial government.

It is a type of industry that needs federal support the same way you've supported oil and gas, but at the resource level it's owned by the province or territory. We'd like to have parallel meetings, such as this, with our counterparts in the provinces and territories. It's a little bit of the cart before the horse. We need to see that the federal government is in place and supporting it.

When they look at our slides and we have so many points of not having parity with the other industries, that becomes a challenge, I think, for the provinces to see that the feds are serious. Right now you can have, again, the Canadian resource property, and if you're a natural gas well you get to write off or claim the expenses for the very same permit I'm talking about, that lease. However, if I'm a geothermal person trying to sell heat against natural gas, they inherently have an economic advantage and so on.

We have the technology, the people, and the resources, but we don't have policy parity and we don't yet have the provinces and territories where they need to be, with the exception of British Columbia.

[Marc Serré, Liberal, Nickel Belt, ON]

You talked about oil wells and abandoned wells. Obviously with mining there are tailings ponds. I'm wondering if you've worked on any of the tailings ponds with mining.