Natural Resources Committee on May 11th, 2017

[Nathan Neufeld]

Yes, and just to follow up, we certainly agree with Michael's assessment as well.

In our opinion we don't see great help with the federal government doing a deep dive into the regulatory issues around clean technology, but our approach is more at the periphery. We feel that if the government provides elements of support, clarity.... I agree with Michael as well that we're not looking for bags of money, but I think we're talking about incentives for both the technology developer and the adopter, more on the tax side where any financial gain ultimately ends up back in the government's pocket through additional revenue that the companies are producing.

[John Barlow, Conservative, Foothills, AB]

Great. Thanks.

Mr. Binnion, something you said caught my attention: we have to look at ways for other countries to benefit from Canada's technology and our innovation and our very environmentally friendly way of doing things when it comes to natural resources.

I've heard you speak before at other events. Just as an example we had Chelsey from Young Women in Energy, and she talked about Singapore putting a tax on Tesla cars because of the GHG emissions on the production of those cars and the batteries. This is certainly a different perspective from what we have, especially in Ontario where you get a $14,000 rebate for buying a Tesla.

You've also talked about carbon leaks, and I know you had a second to touch on it in your presentation. Could you talk a bit more about the benefits of embracing the way we do things here in Canada, our environmental standards and regulations, and the opportunities we have that would have a true impact on global GHGs if we were able to export that technology, that innovation, and those intellectual skills to other countries?

[Michael Binnion]

Yes. What I think we're missing in a lot of our policy discussions is the impact that our policy at home can make internationally. We might think we're incenting people to reduce emissions by putting a tax on them, but we could just as easily be incenting people in Quebec and Ontario to import gas from Pennsylvania because you can export your carbon when you import their gas and it won't count in your own numbers. That's the carbon leakage problem. Are we incenting better behaviour, or are we just incenting the export of our carbon, our jobs, and our taxes, all to end up having made the global carbon worse while our own local carbon got better?

I've been saying for a long time that if we have the best.... As just a quick aside, we already have some of the best incentives in the world for adoption of clean tech. That's how we got to be the best, but that doesn't mean we can't be better. If we could export our resources.... Canadian aluminium has the lowest emissions per tonne of aluminium in the world. We should be finding a way to export more of it to the rest of the world to help with carbon emissions, not finding ways to produce less of it.

I could say the same thing about the technologies that go into producing our resources. If our resources are produced to the best standards in the world, often with the lowest carbon content in the world, we could not just export the resources to make the world's global emissions better; we could also export the technology and the knowledge to those other countries.

[John Barlow, Conservative, Foothills, AB]

Michael, and maybe Nathan and John can answer this too—you both talked about it—if you could each take 15 or 20 seconds, which is all the time I have, what would be your definition of clean technology? That's certainly something we've discussed around this table as well.

[Nathan Neufeld]

From our standpoint, we use a lot of internal criteria, which we've gathered over the years, to define what we call “green chemical technology”. We utilize a database [Technical difficulty—Editor] from the Canadian government, from the United States, and from Europe as well. We can draw a very wide range of data from regulatory standards.

Honestly, I think the definition that the natural resources committee has proposed is completely fine. It's broken up into two parts: any products or services that remediates or prevents environmental damage; and any product or service that is less polluting or more efficient. Again, there are tremendous variables in determining if products meet that criteria or not, and that needs to be managed in a very professional and non-biased way, and the non-bias issue is another topic.

Go ahead, Michael.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there.

Mr. Binnion, you may be able to get back to that later, but we're going to have to move on, unfortunately.

Go ahead, Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you all for appearing before us. I won't say “for being here”.

I'm going to follow up on the gas leak and carbon leakage puns that Mr. Barlow started and ask Mr. Binnion maybe some more about the real carbon leakage and your zero-emission gas company, that plan. Talking about the methane reductions that the government had planned between Canada and the United States, now these have been put off for three years I understand, because of pressure from the industry.

I'm just wondering if those measures could have incentivized work here in Canada that we could then perhaps export to the rest of the world to reduce emissions around the world, so that those technologies developed in Canada would not only help the world but help Canadian companies and jobs in the sector.

[Michael Binnion]

I'll start with your last point and of course, there's been this new report that came out through the David Suzuki Foundation that methane has been under-reported in the industry. I think the Canadian Association of Petroleum Producers has come out quite strongly to refute the underlying assumptions of that report.

I will say that, according to the Canadian Association of Petroleum Producers, even if the United States went forward and was successful under the Obama requirements to reduce methane venting and emissions by 45%, Canada would still have been lower, so we're already well ahead.

I can tell you at the same time that, in terms of technologies, we're well ahead mostly due to regulations and requirements to flare. Restrictions on how much you're allowed to flare are just so much stricter in Canada than they are in many places in the United States, and venting as well.

I'll just offer an example where we could do better. Questor—not to be confused with Questerre, which is my company—Technology has an incinerator technology, not a lot more expensive than flaring, but it is a bit more expensive. As a result, it has not been widely adopted, even though it would clearly reduce these emissions even more.

Just getting back to the great incentive we have to be the world leader by more than 45% on this issue, it's a combination of regulatory approaches and technology that could be adopted elsewhere, and also I acknowledge that there is absolutely room to improve, as I think Evergreen and Nathan were talking about.

Then on the beginning of your question, we're very excited to take the idea of Suzanne West's, and I give her full credit for having had the idea of a new way of thinking about our industry. It may not be a new way of doing things, but a new way of thinking about what we do. I'm excited that in Quebec we do have that zero-emissions energy source. If we can eliminate all the diesel generators, which we can, if we can eliminate all the natural gas or diesel compressors, which we can, we can achieve the dream that she had of zero-emission natural gas in Quebec, yet we have people opposing it on the basis that any new local business in Quebec would increase emissions. It's true in Quebec, but we would have a massive reduction of global emissions, yet that doesn't seem to matter to some people.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Right.

Could you just expand on the zero-emissions quest, if I can use that word, and just exactly where you are there, what you have to achieve, what has to be done to reach that, and how that zero emissions is being achieved?

[Michael Binnion]

We have a seven-phase plan from now until 2030. It aligns with the Transition énergétique Québec, which is their plan and actually goes to 2050 but they have milestones at 2020, 2030, and 2050. We're lining up with the 2030 milestone as a target to be at zero-emissions production of natural gas in Quebec. Just with what we know and what we've been able to accomplish, there have been quite dramatic improvements in technology already, as we've seen in the United States in the shale gas.

In the early stages of our goal of being at zero emissions, zero fresh water, and 100% biodegradable chemicals, where we're at and what we've already developed is that we can electrify the compression, instead of using hydrocarbons to run compressors. We can electrify our dehydration equipment, which takes the excess water out of the natural gas. That can also be electrified. It takes that to near-zero emissions. In fact, most rigs already are called diesel electric rigs. They're electric rigs run by diesel generators. We just take those straight from the grid and eliminate all the emissions from the diesel generators.

We're already over 50% there in terms of reducing existing emissions on the drilling and completions of oil and gas wells, just by what we can do now today. We have 100% recyclable water. In Quebec, we have all the water testing, and that technology we have today. The future state would be to use grey water out of our sewage treatment plants and other places like that, and not use fresh drinking water for fracking. Then, on the biodegradable chemicals, right now, today, we can use frack fluids that are non-toxic but might not be non-bioaccumulable. But we think that by 2030 we can easily get to 100% biodegradable frack fluids as well.

The final step, which is going to take longer, is the adaptation of vapour recovery technology, already well implemented at refineries and other similar installations around the world, but of course those are very large projects, big economies of scale. The adaptation of vapour recovery technology to mobile drill sites would be really the final step toward getting us to zero-emissions production of oil and gas.

The one thing is that we get there in part by saying we're not getting [Technical difficulty—Editor]. We're looking at transportation as being more of a society problem and not directly related to oil and gas because everybody has to transport things. So we're not counting that when we say zero emissions.

[The Chair, Liberal, James Maloney]

You're right on time.

Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, both. I don't generally sit on this committee but I found what both of you had to say interesting.

Let me just ask a question that has been disturbing me, from a variety of anecdotal sources. That has to do with goods and services crossing the border in the last few months. Have any or either of you experienced any difficulties with respect to either people or goods or services crossing the border in the last few months?

[Michael Binnion]

I don't have enough business in the United States, personally, to be able to make a helpful comment to you on that.

[John McKay, Liberal, Scarborough—Guildwood, ON]

The other...?

[Nathan Neufeld]

As far as Evergreen goes, no, we haven't had any negative experiences. We have done a fair bit of business in the North Dakota region. We do a lot of work in the Bakken, and there's a lot of connectivity right now. There has been for a number of years, between Alberta and North Dakota and that region, so, no, I would say not. We haven't noticed anything abnormal or unusual.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I suppose it's entirely anecdotal on my part to hear of people, particularly smaller businesses, doing business in the States and having border difficulties. But I'm pleased, actually, to hear that you're not. That's good.

Your testimony primarily talked about the role of government in both incentives and penalties, trying to encourage behaviour that reduces the carbon footprint. In the case of Evergreen, you had a couple of fairly promising technologies that didn't quite go where you wanted them to go at the end of the day. In the overall situation, had there been in place a cap and trade system where they had been trying to acquire credits to reduce their carbon footprint, or a carbon tax system, would the decision of your potential customers have potentially been different?

[Jonathan Dueck]

In the two misses we spoke about, I don't think a cap and trade or a tax like that would have pushed either one of those two over the top. I'm trying to think if there are any that would.

We have a positive impact on.... Water usage is probably our biggest impact.

[John McKay, Liberal, Scarborough—Guildwood, ON]

It stands to some logic that if your customer is reducing their carbon footprint for a product where you had a couple of misses, the decision might have been slightly different, because your customer would have benefited by reducing their carbon footprint.

[Jonathan Dueck]

Maybe in that case there was a significant impact, but the two products we talked about....

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay. That's fair.

Mr. Binnion, do you have an opinion on that?

[Michael Binnion]

First, I'll go to the end and go back to the example I gave of Questor, which has the incinerator technology. To the extent there was an additional carbon cost, it could make the difference to say maybe I'll incinerate versus doing flaring. I think there's an example that would speak to what you're getting at, that carbon taxes could create an incentive.

Going back to the question I didn't answer before though, as does Evergreen, I like the broader definition of clean tech that talks about environmental benefits and not just carbon benefits. I'll give you the example of Oslo, Norway, that has adopted, as many places in Europe did, the new high-efficiency diesel engines, which have a lower carbon footprint, but people forgot about the acid rain problems of the 1960s and 1970s, and the smog problems that our generation was able to solve. Now people with diesel cars can only drive into the centre of Oslo every second day because smog came back.

Therefore, I think we need to expand this idea of what a clean technology is to some of the things that Evergreen has, which may not be directly related to greenhouse gases but nonetheless are very germane to a better environment in terms of the potential to clean up contaminants or other actual pollutants in the environment, versus carbon. I think the point is in some ways—

[John McKay, Liberal, Scarborough—Guildwood, ON]

That's a perfectly legitimate point, because doing good on the left hand and doing bad on the right hand is not necessarily a good solution.

One of the problems with the flow-through shares and a variety of others, even SR and ED, is that they were gamed by a variety of companies, and they fell out of favour as policy instruments around here for a long time, because banks were claiming SR and ED credits and flow-through shares became the annual game around budgets.

I wonder whether, even given the limitations of a carbon tax and a cap and trade system, that may be a way to incent good behaviour and punish bad behaviour. The legitimate point you make, Mr. Binnion, is that it may be too crude.

[The Chair, Liberal, James Maloney]

Your answer is going to have to be very brief.

[Michael Binnion]

I think often a broad tax on everything can act like a sledgehammer trying to solve a specific problem. As Evergreen alluded to, and as I did in my recommendations, we've seen often that a regulation limiting discharge at a sewage treatment plant, for example, will then allow people to develop the technology to meet that. That is a much more surgical answer to a problem. You could increase carbon taxes quite a lot and not have achieved anywhere close to what the EPA average mileage fleet rules accomplished.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you.