Evidence of meeting #62 for Natural Resources in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was hydro.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Clerk of the Committee  Mr. Marc-Olivier Girard
Niall O'Dea  Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources
André Bernier  Senior Director, Electricity Resources Branch, Energy Sector, Department of Natural Resources
Mark Sidebottom  Chief Operating Officer, Utility, Nova Scotia Power Inc.
David Cormie  Director, Wholesale Power and Operations, Manitoba Hydro

3:35 p.m.

Liberal

The Chair Liberal James Maloney

Good afternoon, everybody.

Welcome back. It's our first week back in session. I hope everybody had an enjoyable summer, as fast as it was.

We have some new members on the committee.

Mr. Falk, I understand you are—

3:35 p.m.

Conservative

Ted Falk Conservative Provencher, MB

Official.

3:35 p.m.

Liberal

The Chair Liberal James Maloney

Mr. Shipley—

3:35 p.m.

Conservative

Bev Shipley Conservative Lambton—Kent—Middlesex, ON

I'm not.

3:35 p.m.

Liberal

The Chair Liberal James Maloney

Mr. Shipley is not official, but he keeps showing up. We're grateful for that. Thank you for being here.

Ms. Stubbs, congratulations on your new critic role. You'll continue to be with us on the committee, which we're all very pleased about.

We have two sets of witnesses today. We have the department officials, who are joining us for the first hour. Thank you very much for being here. Then we have two witnesses in the second hour.

Before we get to that, I'm going to turn it over to our clerk. We have to elect a new deputy chair.

3:35 p.m.

The Clerk of the Committee Mr. Marc-Olivier Girard

Thank you, Mr. Chair.

For your information, pursuant to your Standing Orders, the first chair of this committee must be a member of the official opposition.

I'm now prepared to receive motions for the first vice-chair.

I'm listening, Mr. Serré.

3:35 p.m.

Liberal

Marc Serré Liberal Nickel Belt, ON

Thank you.

I would like to move that Ms. Stubbs be elected first vice-chair of the committee.

3:35 p.m.

The Clerk

Are there any other motions?

It has been moved by Marc Serré that Shannon Stubbs be elected first vice-chair of the committee.

Is it the pleasure of the committee to adopt this motion?

(Motion agreed to)

September 20th, 2017 / 3:35 p.m.

Conservative

Shannon Stubbs Conservative Lakeland, AB

Thank you.

3:35 p.m.

Liberal

The Chair Liberal James Maloney

In this case, I'll congratulate you for a second time today.

3:35 p.m.

Conservative

Shannon Stubbs Conservative Lakeland, AB

Only on this day.

3:35 p.m.

Liberal

The Chair Liberal James Maloney

All right, without any further ado, I'm going to turn it over to the department officials.

You don't need any explanation on the process or how this operates, so I will not consume any time going through that explanation. I'll give you the floor for up to 10 minutes.

Thank you for joining us.

3:35 p.m.

Niall O'Dea Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources

Thank you, Mr. Chair.

My name is Niall O'Dea and I'm the director general of the electricity resources branch at Natural Resources Canada. I'm joined today by two members of my team, André Bernier and Darcy Blais.

Thank you for the opportunity to speak about this matter. I'll start by providing some context. I'll then share some thoughts on the need to establish strategic interconnections and on what Natural Resources Canada is doing to support this priority.

I'll move on to the second slide.

The pan-Canadian framework on clean growth and climate change defines electricity as the cornerstone of a modern, clean growth economy.

The federal government's goal is to put Canada on a path to move from 80 to 90% non-emitting sources by 2030 and to phase out the conventional coal-fired electricity generation. Along with addressing these challenges, the electricity sector must provide an additional clean supply to support electrification in other sectors.

The pan-Canadian framework proposes an approach that includes four elements. Today's presentation concerns the second element, which consists of connecting clean power with places that need it.

The pan-Canadian framework aligns well with the Council of the Federation's Canadian energy strategy, in particular with areas of focus six and seven. These areas concern the development of clean energy sources and the enhancement of transportation networks.

Since 2005, Canada's electricity sector has made significant progress in reversing the upward trend in greenhouse gas emissions. Ontario and Manitoba have phased out coal-fired electricity generation, and Alberta and New Brunswick have seen some shutdown of coal capacity. All provinces have put in place policies or programs that have supported a significant increase in wind and solar energy. New hydroelectric generating capacity has been built, or is being built, in B.C., Manitoba, Ontario, Quebec, and Newfoundland and Labrador. The 2012 federal GHG regulations for coal-fired electricity set the stage for a nationwide conventional coal phase-out, and the Government of Alberta's 2015 announcement and Environment and Climate Change Canada's 2016 announcement of accelerated coal phase-out will help expedite that phase-out by 2030.

In addition to having to continue to make emission reduction progress, the electricity sector will have to increase electricity generation to supply other sectors electrifying their processes to reduce emissions.

Another challenge we face is aging infrastructure. Back in 2012, The Conference Board of Canada estimated that the electricity sector would have to invest up to $347 billion between 2012 and 2030. This translates into an annual average investment of more than $15 billion simply to replace the existing infrastructure. Actual investments since 2012 have averaged over $20 billion. This investment level will need to be maintained, and decisions that we make now will affect the sector for the next 30 to 40 years, given the lifetime of those infrastructures.

The challenge we look to is great, but fortunately Canada's electricity sector is starting, we think, from a position of strength. Our electricity supply mix is among the cleanest in the world, with about 80% of electricity supply coming from non-emitting sources, about 60% of which comes from hydro. That said, certain regions rely significantly, even heavily, on fossil fuels for their electricity supply, notably Alberta, Saskatchewan, New Brunswick, and Nova Scotia. In many cases, these regions are bounded by provinces with abundant hydroelectric resources.

Let's move on to slide six.

The improvement of interconnections between the provinces can help fossil fuel-reliant provinces transition to clean electricity. Other interconnections can also help manage the variability of wind and solar resources.

At the same time, we must mention the importance of our trading relationships with the United States in terms of electricity. In general, the interconnections with the United States are stronger than the interconnections between the provinces. New interconnections with the United States are being considered, and these will create trade opportunities. However, from the federal government's perspective, our main priority should still be to reduce emissions here.

On slide seven, the chart shows the existing electricity transfer capability between the provinces and the United States. It illustrates the north-south predominance of our existing connections. In particular, the map shows the six major power lines being constructed in Canada and the United States. This north-south relationship has developed for historic reasons.

Many major hydroelectric plants were initially built and funded partly to meet the American demand. In many cases, the load centres in the United States are closer to the plants than the Canadian cities. However, when we look to the future, we can see that the arguments in favour of increasing transportation between the Canadian provinces have become more prevalent given the phase out of coal-fired electricity and the need to reduce greenhouse gas emissions in this sector.

In budget 2016, the Government of Canada announced the two-year, $2.5-million regional electricity co-operation and strategic infrastructure initiative to identify promising electricity infrastructure projects with the greatest potential for greenhouse gas emission reductions. Two dialogues were formed, one in the west and one in the Atlantic. Results are expected by the end of this year, and final reports are due in early 2018.

The results will include some important economic aspects, particularly costs of various options to electricity consumers. More project-specific analysis will then be required to examine broader economic impacts on things like jobs. The results will help inform discussions between neighbouring provinces and the federal government, potentially leading to infrastructure investment decisions by provinces, and decisions by the federal government or federal agencies to lend support.

In the near term there is an opportunity for focus on well-advanced foundational projects. The communiqué that was issued after the 2017 Energy and Mines Ministers' Conference identified the reinforcement of the Nova Scotia-New Brunswick intertie or interconnection as an example of a project to advance in the near term. Such projects we believe will be foundational to Atlantic Canada's longer-term transition to clean electricity.

Let's move on to slide 10.

Ultimately, the provinces determine the pace and scale of the development of new electricity generation and transportation assets in Canada. That's why the collaboration with the provinces and territories is the key to success. The federal government can play a productive role in this process by inviting the provinces to review the regional options for reducing greenhouse gases.

All projects being considered for implementation must undergo an environmental assessment. The projects must also be subject to a robust review and consultation with the indigenous peoples concerned.

In some cases, the electricity transportation projects will have a positive impact in remote communities and will connect the communities to the system. As a result, less diesel fuel will be used for electricity generation and home heating.

The Pikangikum project in northern Ontario, which was announced recently, illustrates the benefits that can result from this type of project.

Finally, to sum up, electric utilities across the country face a challenge. While meeting growing demand, they have to constantly invest in replacing aging infrastructure and, in some cases, shut down coal-fired plants. This is exacerbated by the interest of other industries in using electricity as a means to reduce their sectors' emissions. This challenge presents an opportunity to establish a robust foundation that will form the basis of the country's electricity system of the future. Interties can contribute to that foundation by connecting clean energy to the places that need it. They can also help in integrating variable renewable energy.

Speaking of the future of the sector, I would like to take this opportunity to mention the generation energy event that will be taking place in Winnipeg this October. At this event, stakeholders and experts will have a full debate on the potential pathways to an affordable, low-carbon energy future for the country. Interested participants should visit www.generationenergy.ca for that one.

To conclude my opening remarks I would like to thank you, on behalf of the department, for allowing us to contribute and open your discussion on this important topic. I wish you well in your study of electricity interties, and I look forward to answering any questions that you may have.

Thank you.

3:45 p.m.

Liberal

The Chair Liberal James Maloney

Thank you.

You must have rehearsed that because you were at 10 minutes on the dot. I don't think that's ever happened before. It's a good sign to start off the session.

Mr. Arseneault, I believe you're going to start us off.

3:45 p.m.

Liberal

René Arseneault Liberal Madawaska—Restigouche, NB

Thank you, Mr. Chair.

I want to thank Mr. O'Dea, Mr. Bernier and Mr. Blais for sharing their knowledge today as witnesses.

Will the carbon pricing regulations implemented by the Government of Canada last year help the electrical power sector increase its high percentage of low-carbon electricity generation and why?

3:45 p.m.

Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources

Niall O'Dea

Thank you, Mr. Arsenault. That's a good question.

The carbon pricing regulations will significantly help the entire country make progress in reducing greenhouse gases, especially since the regulations apply to the whole economy. However, in the initial years, the basic pricing may be too flexible to immediately transform the energy or electricity sector, given the fairly high costs of such a transformation. The important thing is that the regulations will enable businesses to include the costs of this transformation in their spending. This will lead to more businesses looking at moving in this direction. The estimate of long-term investments is more important than the initial basic cost. The electricity producers will base their decisions on this estimate.

3:50 p.m.

Liberal

René Arseneault Liberal Madawaska—Restigouche, NB

Thank you.

What technology shows the most potential for the future of the low-carbon electricity system? What technology is best able to benefit from it?

3:50 p.m.

Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources

Niall O'Dea

That's another good question.

I think Canada's strength lies in the diversity of the technological options, which enables the country to address this challenge. Obviously, Canada has a number of hydroelectric resources and a good capacity to develop this type of technology. In Canada, the nuclear component is currently very important, especially in Ontario, but also in New Brunswick. We have the chance to further explore the small modular reactors and assess their potential contribution in the future. We're also noticing very fast growth in solar and wind power. These two technologies are slightly more distributed, but they can make a major contribution. I think this will give us an idea of the natural resources of specific regions and the way those resources can be developed and associated with other resources to develop a low-cost system that will reduce greenhouse gas emissions.

Lastly, I want to say that these are generation technologies. However, there are also transmission and distribution technologies, which are very important. Canada has the chance to be a leader in smart grid technologies. This type of technology will help us use the current systems more effectively.

3:50 p.m.

Liberal

René Arseneault Liberal Madawaska—Restigouche, NB

Would an interconnection strategy provide benefits with regard to reducing greenhouse gases?

3:50 p.m.

Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources

Niall O'Dea

Yes, certainly. It's obvious. That's why we're currently conducting a study.

For Canada, the future will be the combination of distributed clean energy systems and centralized systems. When distributed systems are connected to centralized systems, the system becomes more flexible and reliable. This is an important point.

Regarding strategic interconnections, we must determine where to make these connections so that we have a greater chance of developing power such as wind and solar power. We must also assess the entire system on a national basis. We must find out which infrastructure framework helps obtain the best price in terms of electricity, the quickest possible access to power, and the lowest possible greenhouse gas emission rate.

3:50 p.m.

Liberal

René Arseneault Liberal Madawaska—Restigouche, NB

Thank you.

You referred earlier to indigenous peoples. Can you give us some examples of low-carbon electricity developments that create sustainable economic opportunities for indigenous peoples in the energy sector?

3:50 p.m.

Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources

Niall O'Dea

Yes, certainly. I can give you a few examples, and I'll then ask my colleagues to give you other more specific examples.

I can talk about Pikangikum and the interconnection I mentioned earlier. It's an interconnection in northern Ontario that will connect the indigenous community of Pikangikum to Ontario's major grid. For the first time, this isolated community will be connected to the major system. This will enable the community to obtain electricity on an ongoing and sufficient basis, in order to support the other services provided in the community. It will also ensure the economic development of the community. As a result of this reliable connection to the system, certain types of businesses will have access to more power.

Other small remote indigenous communities will also have the chance to obtain electricity through wind turbines and solar power projects. In addition, indigenous communities in Canada that are directly connected to the electrical system will have the chance to provide electricity to the system, as demonstrated by certain recent projects in Ontario. Although I've forgotten the name of the project, I know that Ontario Power Generation is currently pursuing a project in south-western Ontario. The project, which was developed as an equity partnership between indigenous peoples and the business, is helping to provide opportunities to indigenous communities.

3:55 p.m.

Liberal

René Arseneault Liberal Madawaska—Restigouche, NB

Thank you.

3:55 p.m.

Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources

Niall O'Dea

I don't know whether my colleagues have other examples.

3:55 p.m.

Liberal

The Chair Liberal James Maloney

Thank you. I'm going to have to stop you there.

Ms. Stubbs.