Natural Resources Committee on April 11th, 2016

[The Chair, Liberal, James Maloney]

Good afternoon, everybody. Welcome back after our brief hiatus from Ottawa. Today we have a full agenda.

We're going to be discussing, reviewing, and asking and getting some answers to questions on the main estimates for 2016-17 with respect to the areas that fall under the jurisdiction of this committee, those being Atomic Energy of Canada Limited, Canadian Nuclear Safety Commission, National Energy Board, Department of Natural Resources, and Northern Pipeline Agency.

In that respect, we are very fortunate to be joined by the minister for a second time. We're very grateful, Minister, for you taking time out again to be with us, given your very busy schedule, as well as deputy minister Bob Hamilton for the first hour. Gentlemen, thank you very much for being here today for the first hour.

In the second hour, I understand Mr. Hamilton will stay with us and be joined by another one of his colleagues and we can continue our discussion.

On that note, I am going to turn the floor over to you, Minister, and we can discuss the estimates.

[Jim Carr, Liberal, Minister of Natural Resources]

Good afternoon, Mr. Chair, and members of the committee.

I'm glad to be back again, and so soon. We had a very good conversation the first time I had a chance to sit down with you. I think I said then, and I'd be pleased to say again, that I really believe this is at the very heart of Parliament; members from all sides having an open debate about issues that matter to Canadians.

We may disagree on some of the detail, but we certainly agree on one thing and that is that we all care about the best interests of our country. I am very pleased to spend the next hour with you talking about the Natural Resources Department. I'll talk about the main estimates for the current fiscal year, the supplementary estimates (C), and of course our government's first budget.

As I said when I was here in February, we share a big responsibility with this portfolio. Our task is to ensure Canada's natural resources are developed sustainably as part of a strong economy and a clean environment, and in ways that ensure local communities are the true beneficiaries. All of these things depend upon the choices we as parliamentarians make, the priorities we set, the principles we establish, and the investments we make. The main estimates are part of that. They provide the fiscal base for the coming year, but the main estimates are only part of the story. Budget 2016 fills in the details. It outlines our overarching vision that Canadians are ready and eager to embrace the low-carbon, clean growth economy of tomorrow. Economic growth and environmental protection are not competing interests, but vital components of the single engine of innovation. Canadian ingenuity can rise to the challenge of solving today's problems, bettering our lives, and bringing us the future; a future that will be better, brighter, and more prosperous than we can imagine.

In many ways, our first budget reflects the great opportunities we see in Canada's resource industries: to support research and development, to invest in clean technology and innovation, to promote clean energy and alternative fuels, to engage in more meaningful consultations with indigenous people and local communities, and to develop greener ways to extract and process our natural resources and get them to market.

All of these things are front and centre in budget 2016, with Natural Resources Canada figuring prominently in our government's investment plans.

Those highlights include $87.2 million over two years to update the facilities that support research in forestry, mining, and minerals, earth sciences and mapping, as well as innovation in energy technology; $82.5 million over the next two years for the research, development, and demonstration of clean energy technologies; $62.5 million over two years for recharging stations for electric cars and refuelling stations for vehicles powered by natural gas and hydrogen; $50 million to invest in technologies that will reduce greenhouse gas emissions from the oil and gas sector; and $2.5 million to support regional dialogues and studies that identify the most promising electricity infrastructure projects.

It's a lengthy list, but each of those investments is designed to speed Canada's transition to the low-carbon economy of the future.

There is more. We are also investing $128.8 million over five years to develop new energy efficiency programs and policies. We want to help Canadians save money as they reduce their environmental footprint.

We've committed $81.3 million over five years to support marine conservation activities. Budget 2016 also extends the 15% mineral exploration tax credit for another year. It permits certain costs associated with undertaking environmental studies and community consultations to continue to qualify as Canadian exploration expenses. That's good news for junior mining companies seeking the venture capital they need to finance exploration. It also serves as an incentive to individual investors attracted to the flow-through shares that finance grassroots mineral exploration.

Taken all together, it's a game-changing budget that delivers on our promises to Canadians.

I would be remiss, though, if I did not point out that budget 2016 also gives substance to the international commitments we've made over our first six months in office, including commitments made at the COP 21 climate change talks in Paris last November; at the North American energy ministerial I hosted in Winnipeg earlier this year; in the joint statement on climate, energy, and Arctic leadership that Prime Minister Trudeau and President Obama agreed to in Washington last month; and with our pledge, as one of the 20 founding countries of Mission Innovation, to double government investments in clean energy research and development over the next five years, as well as spurring private sector investments in clean technology.

For example, budget 2016 provides for more than $1 billion over four years beginning in 2017-18 to support clean technology. That includes innovations in the forestry, mining, and energy sectors. We realize that the marketplace will ultimately decide how quickly the global economy goes green, but governments can point the way. We can provide the necessary nudges by pricing carbon, by ending subsidies for fossil fuels over the medium term, and by investing in and supporting the low-carbon, clean-growth economy of the future.

We can also show leadership by building consensus for major resource projects. That's what our interim approach does for assessing and reviewing major resource projects already in the queue.

How? It does so by restoring public confidence in the process; by renewing our nation-to-nation relationship with indigenous peoples through meaningful consultations; by ensuring direct and upstream greenhouse gas emissions linked to a project are considered; by basing regulatory decisions on science and evidence; and by ensuring this evidence includes traditional indigenous knowledge. Our government's approval of Woodfibre's proposed liquefied natural gas project near Squamish, British Columbia, is an example of doing things the right way.

I'm pleased that budget 2016 also includes $16.5 million to implement our interim approach over the next three years. It's a vote of confidence in our efforts to bring Canadians together, to find common ground, and to ensure Canada's resource industries remain a source of growth, employment, and new opportunities in a world that increasingly values sustainable practices. That's why I've also been hosting round tables across the country from Halifax, Saint John, and Toronto to Winnipeg, Calgary, and Vancouver. When you bring industry representatives, indigenous peoples, and environmental leaders into the same room, often for the first time, you quickly discover that there is much more that unites us than separates us.

As I've said before, I have great faith in Canadians and their ingenuity. We are a nation of hard-working, resilient, and visionary people who always seem to rise to the occasion, and I'm convinced that we will do so again.

Great things are within our grasp for Canada's resource industries, and budget 2016 will help us achieve that. Through innovative ideas and important investments, we will redefine our resource sectors and reset our economy for generations of prosperity.

I'm here today, Mr. Chair, to seek your support for our spending plans, to invite all of you to work with us, and to answer any questions you may have.

Thank you.

[The Chair, Liberal, James Maloney]

Minister, thank you very much for your comments.

Before I turn it over to questions, Deputy Minister, do you have any comments you'd like to make?

[Bob Hamilton, Deputy Minister, Department of Natural Resources]

No. Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much.

I'm going to open the floor to our first seven-minute segment.

Mr. Tan.

[Geng Tan, Liberal, Don Valley North, ON]

Thank you very much, Minister, for coming today and for your statement.

The main estimates identify a funding commitment of $969 million for Atomic Energy of Canada Limited, AECL, in this fiscal year. Can the minister tell us what this money is for?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

Well, we want to keep our institutions absolutely safe and modern. There will be a refurbishment of facilities. As you know, in this industry, it is of paramount importance that we keep our facilities in a condition that is safe. We believe these investments will ensure their safety, and we will ensure that there will be monitoring of the way these funds are spent.

We believe that nuclear energy has been very important for Canada. People don't actually understand how important it is. There's a question that I sometimes ask people when the subject comes up: what percentage of Ontario power generation do you think is nuclear? When they hear that the answer is 62%, they're very surprised.

Nuclear energy has been important to our past as Canadians. We want to ensure that we keep up necessary investments so that our facilities are state-of-the-art safe.

[Geng Tan, Liberal, Don Valley North, ON]

Okay.

Let me come back to the $969 million number again. This number is a big increase compared to the amount of $390 million in previous years. Why is there such a big change?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

Previously, AECL received funding through a variety of sources at different points in the year, including main and supplementary estimates, payments from Natural Resources Canada, and Treasury Board central votes. In 2015-16 the total government funding to AECL from all sources was close to $640 million. The government is investing $800 million over five years to renew the laboratories, including new and renewed science facilities that will serve the needs of Canadians as well as the industry.

[Geng Tan, Liberal, Don Valley North, ON]

Right now AECL's nuclear site remains the property of government but is managed by contractors by private sectors.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

That's right.

[Geng Tan, Liberal, Don Valley North, ON]

How is the safety of a nuclear operation maintained by this kind of business model? What are AECL's plans and priorities, and who is going to keep an eye on those managing it?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

As you know, AECL delivers its mandate through a GoCo model, whereby the operations of its nuclear laboratories, including decommissioning and waste management work, are delivered by Canadian Nuclear Laboratories. Under this model, AECL continues to own the land, facilities, assets, and liabilities, whereas the workforce, the licences, and all other aspects of the running of the sites are part of Canadian Nuclear Laboratories' business. AECL is a small crown corporation whose role is to oversee the contract with Canadian Nuclear Laboratories and act as a smart buyer on behalf of the government in order to bring value for money to Canadians.

[Geng Tan, Liberal, Don Valley North, ON]

You just mentioned that our nuclear industry is a small industry globally. How is the ministry going to work to promote our CANDU technology in the global market, for example, in China?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

As a matter of fact, the parliamentary secretary was in China just this past week as part of the Canadian delegation talking about the nuclear industry in Canada. I will have opportunities to travel within the next number of months to Japan for the G7 energy ministerial meeting and then later in June to the G20 ministerial meeting in Beijing. We will be very attentive to the opinion of others, our partners around the world, on the state of the industry, Canada's role in it, and the future potential for Canada to be an important player.

[The Chair, Liberal, James Maloney]

Thank you.

Ms. Stubbs, you're next.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you to both the minister and Mr. Hamilton for being here with us today.

I would like to focus my time on the National Energy Board.

Minister, as you know, the budget for the NEB increased this year compared to the 2015-16 main estimates. It was due to an increase of $18.3 million specifically for energy transportation and infrastructure from the previous government's 2015 budget. In fact, the previous Conservative government committed $80 million over five years to the NEB to contribute to safety and environmental protection and to enhance engagement with Canadians related to transportation infrastructure. The funding was intended to be fully cost recovered from industry.

Recently, as you noted in your opening comments, the Minister of the Environment and Climate Change announced new transitional pipeline review measures that are in addition to the existing NEB process. Of course, we know proponents of Canada's world-leading and sustainable natural resources projects have invested millions of dollars in what they believed was a predictable, responsible, and robust approval process. Now your government is changing the rules of them mid-project, which is perpetuating uncertainty and instability at what I think we can agree is the very worst time. Previous governments, through their significant investment in budget 2015, signalled to industry and to Canadians that safety, environmental protection, and enhanced engagement on energy and transportation infrastructure are important issues that demand appropriate investment from the federal government and they delivered on that.

I have some questions for you relating to the NEB and your government's intention. I'll ask them all at once.

One, does your government intend to continue the $80-million investment in the NEB announced last year by the former government? If not, what will your investment be and how will it assist the board in doing their work?

Two, given your government's insistence that an extra review process is necessary, in addition to the great work of the NEB, do the chair and the experts at the NEB have the confidence of your government, yes or no?

Three, do you plan on making any management changes to the NEB, given your government's ambiguity over confidence in their work and the need for an additional process?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

The answer to the first question is yes, the funding that was announced will be maintained. The answer to the second question is the government has confidence in the chair of the National Energy Board.

We also understand that we have a mandate from Canadians to reform the National Energy Board. That's something we have started to do already in two phases. The transition phase will include those five principles that you know very well.

When it comes time for the energy east pipeline to be assessed by the National Energy Board, we have agreed we will appoint a number of temporary commissioners to help the board in its work to assess that very long and complicated project.

I must say, Mr. Chair, just before question period today the member from Grande Prairie—Mackenzie in his member statement asked the government to approve the energy east pipeline. This is before the application has been lodged with the regulator, and that is part of our problem. If there are members of Parliament who want the government to make decisions on major energy projects even before those projects have been assessed by the regulator, it's no wonder Canadians have lost confidence in the regulatory process.

Our ambition is the same as the ambition for the member from Portage—Lisgar and the same as the ambitions of members of her caucus, and that is to move our natural resources to tidewater and to market sustainably. This is what we all want, but to assume that decision can be made by government before the regulator has even looked at the application is part of the reason we're having to reform the regulatory process.

That is how we will reform the NEB in the short term. In the long term we have a mandate to reform the environmental assessment process in Canada. That will be a responsibility of the Minister of Environment and Climate Change and the Minister of Natural Resources. We will be working together; we will be consulting Canadians; and very importantly we will be consulting members of this committee.

We will be posing the question: if you had to create a Canadian regulator from scratch, what would it look like? What would the principles be that would determine the structure? What would the legislation we would ask Parliament to pass consist of? What would the values be? What is the relationship ultimately between the government and the regulator?

That is the longer-term reform of the NEB. The process we have introduced now seeks to establish a broader consensus across the country.

[Shannon Stubbs, Conservative, Lakeland, AB]

I would like to clarify one of the points you just made. After the reform and the changes you say you want to make to the NEB, because obviously you don't trust the process or the experts there, then you want to appoint temporary commissioners to help the board after the proponents have made it all the way through the additional layers and costs you're going to add.

How does that indicate you trust the evidence-based decision-making of the experts of the NEB if you also want to appoint temporary commissioners to so-called help them, as you just said?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We will appoint the temporary commissioners during the assessment process of the National Energy Board once the application from the proponent has been lodged with the regulator. That hasn't happened yet.

[Shannon Stubbs, Conservative, Lakeland, AB]

Who are they?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We haven't appointed them yet.

[Shannon Stubbs, Conservative, Lakeland, AB]

What will the appointment process of the measures be?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We've announced a new system of appointments. It will be available for parliamentarians to see. We think there are values to appoint temporary members of the National Energy Board to ensure the diversity of the country is represented, to ensure that indigenous cultural practices are a part of the review, and those will be the qualities and the skills we'll be looking for when the appointments are made.

[Shannon Stubbs, Conservative, Lakeland, AB]

What will be the timeline for the appointments?