Thank you, Mr. Chair.
Thank you for inviting me for the second time to participate in your committee's work. This is a great honour for me.
My name is Michael Binnion, and I am the chairman of the Quebec Oil and Gas Association, QOGA. Our organization was created to encourage dialogue on the development of Quebec's oil and gas industry. QOGA represents about 20 regular, associate or affiliate members.
QOGA believes that it is possible to develop Quebec's energy resources in a safe and environmentally responsible manner, while contributing to the province's economic growth and social development.
Quebec's new energy policy includes local hydrocarbons and considers them to be part of the solution for the energy transition. It is clear that, since requirements regarding local hydrocarbons are more stringent than those applied to hydrocarbons from abroad, they have much lower emissions.
Therefore, we feel that a balanced energy diet is the best way to meet the numerous needs of the Quebec society.
Before I founded Questerre Energy and discovered one of the largest and one of the cleanest natural gas fields in North America, I was in international oil and gas, and even today I'm working in the Kingdom of Jordan and Papua New Guinea in addition to Quebec.
I've worked in more than a dozen different jurisdictions around the world. In particular, I've had the opportunity to work in the republic of Georgia, working with Eduard Shevardnadze and his government to implement a new oil and gas law just after the civil war.
Over the last few years I've worked successfully through the public consultation process on a new energy policy and a new hydrocarbon law in Quebec.
I had a career before oil and gas. As a very young Albertan, I was inspired by Pierre Elliott Trudeau's words that Canada should stop being hewers of wood and drawers of water for our cousins to the south. His message that Canada should embrace a new high-technology economy captivated me, so I resolved never to work in oil and gas, thinking we would soon run out of it anyway and it was yesterday's industry. I did keep to my word for 15 years.
My early career was as an R and D tax accountant in Toronto, and I graduated to public venture capital and angel investing in the high-tech sector. Along the way I published a peer-reviewed paper in an international geology journal, Marine and Petroleum Geology, and also published one of Canada's first economic research papers on carbon leakage and policy options.
Technology and public policy are my main interests, occupations, and avocations, which is a good thing because, in spite of my early resolve, I ended up in the oil and gas business.
What I've learned over the past 20 years is that oil and gas is more high tech than high tech, and more importantly, there is nothing wrong with being hewers of wood and drawers of water when you're the world's best at it, using world-leading technologies, though I still agree that Pierre Elliott Trudeau was right not to be captive suppliers to our cousins to the south.
This leads me at last today to the eight priority questions. The most important thing I've learned in my public policy experience is that it's far more important to have the right questions than the right answers.
The question on how to de-risk the adoption of clean technology in the natural resource sector implies that Canada's resource sector has not been successful at adopting clean technology. Well before I started in the industry...and our earlier two presenters showed some examples of adoption of technology. The question presumes that the risk of performance of clean technology is blocking resource companies that just aren't quite able to realize the obvious benefits, so the really smart people have to help them out.
This is just simply not true. To those Canadians who say we're not the best and most resourceful people in the world with the respect to creation of resources, I say speak for yourselves. Yet there are even people in our own industry who believe the outdated narrative of our resource industries being old tech and not clean tech.
An interesting story is the story of Imaginea. Ms. West is an inspiring figure. She had a dream to start a new kind of oil company. At first I was interviewed by a documentary filmmaker from California on how Ms. West and Imaginea were going to create the zero-emissions oil and gas company. I have a lot of time for Ms. West and her imagination, and you will understand why in a moment, but her dream ran into a problem. All good stories need a villain, and her villain was the fossilized thinking of oil and gas executives.
Well into her business plan she had implemented a dozen or so clean-tech initiatives on her route to a zero-emissions oil company. The problem was, as I mentioned to the documentary filmmaker, who I think in retrospect had cast me as the villain in his film, my junior company had already implemented every one of her initiatives in our own projects. We just hadn't put it on a web page or in a documentary film. I can tell you some of my junior peers are ahead of Questerre with the use of hydrogen fuel cells and solar automated PLC controls to reduce environmental impacts and increase efficiencies.
The big companies are even further ahead and have created a privately funded technology supercluster equivalent, with over $1 billion in research a year. It is truly progressive and leading thinking on clean tech to co-operate with your competitors on technologies good for the environment and the whole industry. It's why Ms. West has had to adjust her Imaginea story, because there is no fossilized old-tech villain to make her story captivating.
I've reviewed hundreds of high-tech business plans with a view to risking my own money, which I've made from successful investments and high-risk ideas. They all have a story of how people miss the obvious. Occasionally one of them is right, but most of them are not.
“I need help in de-risking” is often code for “I need someone else's money”. When we de-risk an exploration project at Questerre using amazing state-of-the-art technologies, we need a lot of money too. Government has no business doing resource exploration with taxpayers' money. It's too risky, and those with the expertise and experience in risking their own money will make better choices.
Back to the questions, some better questions might be these. First, how can the federal government within its jurisdiction ensure that Canada's resource sector remains the world leader in the adoption of clean technology? Second, what policy instruments have been most responsible for Canada's resource sector's world-leading performance with clean technology? Could other jurisdictions benefit from Canada's leading clean technology and expertise to improve their environmental performance? Third, what institutions have been most successful in furthering the adoption of clean technology, and can the Canadian government further leverage those institutions to enhance Canada's lead in the adoption of the new technology?
I feel the final question about what recommendations the committee should have was a fair and open-ended question without any a priori assumptions, so I chose to answer that one. Here are my recommendations.
First, don't screw it up. If in doubt, when you're the world's best, the best thing you can do is keep doing it.
Second, Mayor Nenshi in Calgary has raised my taxes 30% in three years and is still taking on debt. Nonetheless, he has done a first-class job telling the world that Canada is the best place in the world to live—or Calgary is. Could we ask our government in Ottawa to do the same and promote Canadians being proud of what we are indisputably the best at—resources? International benchmarking studies would assist in doing this.
Third, I think we should keep the R and D tax credit program but consider making small reforms to tighten up credits for what are routine business risks.
Fourth, we should create a high-tech flow-through share as we have in the resource industries, making it easier to find private investment for new clean technologies by being able to pass on the R and D tax credits to investors who take the risk.
Fifth, I recognize markets do fail sometimes and also that there are times for Manhattan projects. Both recent history and economic research have shown that evidence-based regulated targets that allow the market to choose and adapt the best solutions to attain them is the most efficient solution for these problems. Our prior presenters, I think, made a similar recommendation.
Sixth, please heed back to Jean Chrétien's words on the adoption of Kyoto. Canada already does a lot to reduce emissions in the rest of the world, and could have a bigger impact globally than at home. Canada has to look at the problem of carbon leakage as a huge priority and a global problem. There are only three countries in the OECD that are net exporters of high energy-intensive goods: Australia, Norway, and Canada.
Australia realized that Kyoto production-based accounting for carbon was bad for their exports with comparative advantages in carbon and opted out. Norway realized the same and reformed its fiscal terms for its resource sector to substitute carbon pricing for government take. Canada has not done the economic study. If the precautionary principle applies anywhere, it surely applies here.
In conclusion, I'd like to return to Imaginea. I realized in talking to Ms. West and her filmmaker that her dream was possible. She only needed a zero-emission source of electricity or energy. I had seen the fully electric rigs that the Soviets had used in Georgia, and I knew where there was a large economic natural gas discovery with access to zero-emissions electricity.
We are working now to make the Imaginea dream of an emissions-free oil and gas company a reality with Quebec clean gas 2030. Using existing technology, we can drill and produce natural gas in Quebec using emissions-free hydroelectricity. My recommendation is to do the carbon leakage study so policy-makers can understand how Quebec and Canada's carbon policies create emissions incentives to import natural gas from Pennsylvania versus develop cleaner gas locally.
As far as de-risking our Quebec clean gas 2030 project goes, we're really already on it, although reinstating the Canadian exploration expense deduction of 100% for exploration wouldn't hurt at all.
Thank you very much for your attention.