Okay.
Evidence of meeting #94 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 offshore.
A recording is available from Parliament.
Evidence of meeting #94 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 offshore.
A recording is available from Parliament.
9:35 a.m.
Liberal
The Chair Liberal James Maloney
Mr. Keating, we're changing course a little bit. You can expect to be sitting here listening to something other than questions, I suspect, for the balance of your time. If we're still on this path in about 10 minutes, I'll thank you then and you can carry on so you don't have to listen anymore.
9:35 a.m.
Conservative
Ted Falk Conservative Provencher, MB
Yes, Mr. Keating, I want to apologize for cutting into your time, because it's been very interesting. I gave you as much time as I could while still giving me the time to put this motion forward, because it is important. Data collection is important, and it will be important moving forward in this industry of oil and gas exploration and development.
However, given the enormous importance of the Trans Mountain expansion to the Canadian economy, and given the failure of all major pipelines to go ahead, I move that this committee proceed with a study to find solutions to this growing crisis that threatens to affect all of Canada.
Mr. Chair, the urgency of this matter is highlighted by the Kinder Morgan deadline of May 31. Today is May 1.
Greg D'Avignon, president and CEO of the Business Council of British Columbia, has expressed why this is an urgent matter requiring immediate attention:
We’re here today because the organizations and individuals in communities and businesses across this country believe we are at a point or crisis of confidence in Canada. A crisis that needs leadership and immediate attention to resolve.
The business community is nervous about this inability of the pipeline to be built. Mr. D'Avignon is not the only concerned business leader. Laura Jones, executive vice-president of the Canadian Federation of Independent Business, has said:
If uncertainty is allowed to continue, it risks doing serious damage to this country’s reputation. We need to find a better path forward and we need to do it now.
As was noted earlier in this committee by my honourable colleague Shannon Stubbs, the member for Lakeland, the Trans Mountain pipeline expansion crisis is an emergency. It has been reinforced by Parliament with emergency debates in the House, the Senate, and even by cabinet. Parliament has called it an emergency. Business leaders have called it an emergency. Kinder Morgan has deemed the situation an emergency, as they have suspended non-essential spending until the situation is resolved in a concrete manner and in a way that makes the project tenable.
Mr. Chair, I would say that this committee needs to declare this an emergency. I believe this committee needs to take responsible action and do an immediate study. The urgency of the situation requires us to do this. It falls within the scope and mandate of this committee's job. I think this is something that we need to prioritize. We need to get pipelines built so that we can get our oil to markets. These markets are desperate to buy our oil. Pipelines are the safest, most efficient conduit for Canadian oil, but we're unable to build a pipeline to get the oil to market, which will have serious consequences for Canada as a nation.
The Department of Natural Resources has indicated that Canada has the third-largest oil reserves in the world. In fact, Canadian oil reserves account for about 10% of the world's proven oil reserves. Energy production counts for about 7% of Canada's nominal GDP, according to the Department of Natural Resources. Oil is essential to our economy. Canada is the sixth-largest energy producer, the fifth-largest net exporter, and the eighth-largest consumer. Canada is a big player worldwide in terms of energy. The United States, currently our largest market, accounts for only 2.3% of the world's proved oil reserves, which puts it at tenth place.
Canada and the United States are the only two free democracies on the list of top 10 proven reserves. Other countries include places like Venezuela, Libya, Saudi Arabia, and Russia. Despite all of our oil, due to our nation's geography we have only three major directions to export this vital resource, which is needed to lift many people out of poverty—to the south to our American friends and neighbours; to the Pacific and to hungry Asian markets; and to the Atlantic, where we have refineries and access to Europe.
Unfortunately, the route to the Atlantic through the TransCanada energy east pipeline did not proceed. This major nation-building exercise failed. That failure has cost Canada its truly most precious resource, and that is its unity. Oil in Canada is a resource, but the pipeline dispute is more than simply about energy: it's about national co-operation. It's about western Canada and eastern Canada working together. In fact, it was oil revenue and the strength of our exports that allowed our nation to emerge from the recession in relatively good shape compared with our peers. This is now being taken for granted, and our development and investment are falling behind.
One CEO was quoted in the National Post by John Ivison as saying, “The level of foreign investment has never been so low and continues to fall off a cliff. There is a real, genuine, honest, non-partisan concern that Canada is so completely out of touch with the real world.”
Foreign investment drives innovation and drives development, and I think we've heard testimony to that here this morning by Mr. Keating. Our oil sands were and are a source of tremendous innovation. Oil should not be seen as a dirty resource that we are ashamed of, but as a source of wealth that not only provides good, high-income jobs in the private sector but also funds our strong and talented public service.
I would like to quote from Dr. Kevin Milligan, a professor of economics at UBC's Vancouver School of Economics. In an April 16 submission to The Globe and Mail, Dr. Milligan argued that it is natural resources, particularly energy, that is growing and sustaining the middle class in Canada. He puts his argument forward very well, and I quote:
Opinions on pipelines are flowing around Canada more quickly than the oil. The ultimate decisions on natural resource projects, however, ought to derive from facts. As an economist studying income inequality over the last 15 years, I can offer a key fact to the debate. In my view, nothing has contributed more than natural resources to buttressing the Canadian middle class against the rapidly changing global economy of the 21st century.
Mr. Chairman, in a rapidly changing global economy of the 21st century when so many Canadians are turning to the gig economy to make ends meet, it is natural resource jobs that provide good-income jobs. Natural resources are good for all Canadians and for Canada as a country. Natural resources, especially oil, are vital to good, sustainable, long-term growth, which creates middle-class jobs. Dr. Milligan puts this in context, and I'll quote him again:
The impact of natural resources is not just on those who work directly for natural resource companies. There are large wage-spillovers to others working in resource communities in construction, transportation and services. Moreover, resource-derived tax dollars fill up government coffers to support strong compensation in middle-class public sector jobs in nursing, education and transit. And what's more, these benefits don't only help provinces with plentiful resources, since our equalization formula uses the federal purse to top up provinces without comparable resource-revenue streams.
What that means and what it should mean is that projects like the Trans Mountain pipeline expansion are good for the national interest. Yes, Alberta is a prosperous province in no small part due to oil revenue, but it also contributes greatly to national equalization payments. Equalization payments allow for all provinces and regions of Canada to share in our natural resources. Oil revenues fill government coffers across 10 provinces and three territories. If we lose the ability to export our oil or we lose the opportunities that oil revenues provide, our nation will be poorer both in dollars and in national unity.
Oil provides for the most vulnerable, supports first nations communities, strengthens the middle class, and helps everyone get along. Dr. Milligan highlights some of the benefits of oil to Canadians all over the country. He has said:
We also must count the Canadians living in First Nations communities near resource developments. In British Columbia since 2009, we have developed a system of Economic and Community Development Agreements that share resource revenue with nearby First Nations. This structure allows the legal certainty that resource companies need to proceed with long-term investments and the sharing of economic benefits that First Nations deserve for the future of their communities. This kind of agreement is another way natural resource revenues are dispersed across our economy.
Around the world, the relentless pressures of technology are hollowing out middle-class employment, leading to stagnating middle-class incomes and exacerbating social tensions. These same pressures appear in Canada too, but resource development has allowed the Canadian middle class to push back on these pressures better than almost any other advanced economy on earth.
The stakes we face are high. To maintain public support for pro-growth initiatives such as trade agreements and for doing Canada’s part in limiting climate change, we need to ensure that economic growth is felt by everybody in society. Economic growth that brings everyone along gives all families a stake in Canadian economic success. This increased economic security energizes social forces that pull us together.
That's the end of his quote.
What he does not say is that decreased economic security also energizes social forces, but social forces that pull us apart and threaten national unity.
This is, unfortunately, happening.
British Columbia and Alberta are engaged in a fierce fight over pipelines. The federal government, which is the government with the actual authority to act on this matter, has been largely silent. The silence has allowed B.C. and Alberta to fight a battle they have no real business fighting.
Kinder Morgan's Trans Mountain pipeline was a federally approved project, yet the debate and protests over this project have turned this pipeline dispute into a debate on national unity. The only reason this could have turned into a debate on national unity is the lack of leadership from the federal government.
The NEB is a federal regulator. When the NEB grants its approval on a project, the project is and should be ready to go. The federal government maintains the right over the transport of energy between provinces. Trans Mountain—
9:45 a.m.
Liberal
Marc Serré Liberal Nickel Belt, ON
Mr. Chair, I have a point of order. We have witnesses who have travelled and have taken the time and expense to come to present to us. I just want to see if Mr. Falk is wrapping up on this important issue. We have some witnesses here who have been scheduled.
9:45 a.m.
Liberal
The Chair Liberal James Maloney
We have one here and one by video conference. Should we release them, or should we keep them here?
9:45 a.m.
Liberal
The Chair Liberal James Maloney
I'm in your hands in terms of timing. If you intend to speak for the better part of the next 50 minutes, then I think that in fairness to them, we should release them, but if you tell me you're going to be done in 10 minutes, then we'll keep them.
9:45 a.m.
Conservative
9:50 a.m.
Conservative
Ted Falk Conservative Provencher, MB
The federal government, which is the government with the authority to act in this matter, has been largely silent. The silence has allowed B.C. and Alberta to fight a battle that they don't have any business fighting.
Kinder Morgan's Trans Mountain pipeline was a federally approved project. The debate and protests over this project have turned this pipeline dispute into debate on national unity.
The NEB is a federal regulator, as I previously said. When the NEB grants its approval on a project, the project is ready to go. The federal government maintains the right over the transportation of energy between provinces. Trans Mountain was approved, and the law is clear: the federal government has jurisdiction. The Government of British Columbia hijacked the process, and the federal government did nothing. This lack of action has allowed a constitutional crisis to develop. Because of this unnecessary crisis, Kinder Morgan has said that unless the situation is resolved by May 31, they will pull out of the project.
CEO Steve Kean said:
A company cannot resolve differences between governments. While we have succeeded in all legal challenges to date, a company cannot litigate its way to an in-service pipeline amidst jurisdictional differences between governments.
In other words, Mr. Chair, unless the federal government steps up and asserts its rightful authority, there will be a vacuum in terms of leadership. Disputes cannot be resolved, particularly not contentious ones, if the federal government does not assume its proper and correct role as the ultimate say. This should not be a difficult issue, given that the movement of energy product between provinces is a federal jurisdiction. If the federal government does not act upon its responsibility within clear federal power, then Confederation will constantly be threatened by every dispute. This is not an acceptable state of affairs.
In fact, the Government of British Columbia is playing a very dangerous game. They are risking the unity of our Confederation by refusing to accept federal jurisdiction. By deliberately and willfully flouting federal direction, B.C. has opened up a constitutional mess. An April 19 editorial from the Waterloo Region Record, republished by the National Post on April 20, concludes its analysis of the situation very skilfully:
Why would any other province takes Ottawa's leadership and authority seriously when there are no meaningful consequences for ignoring it? Why would any international business invest in a country where legally-approved projects can be derailed so easily? Canada's credibility, as well as Trudeau's, is on the line.
In fact, Mr. Chair, this hit to our credibility is already happening. In an April 9 press release, The Explorers and Producers Association of Canada has attacked the lack of federal action. They say:
The Explorers and Producers Association of Canada expresses our deep concern with the announcement by Kinder Morgan that it is suspending all non-essential activity and spending related to construction of the Trans Mountain Expansion Project.
This critical national project, approved by all relevant regulatory authorities and the Federal Government, has been allowed to be frustrated, harassed and blocked by the abject failure of the Federal Government to provide effective national leadership and government for all Canadians, particularly those in Provinces who need access to our national seaports to support their economies and their citizens.
Kinder Morgan’s statement that it is unwilling to risk billions of dollars of its shareholders money without a clear path forward is yet another devastating critique of Canada’s growing reputation as a state where the rule of law is not respected and enforced by national and subnational governments. Private sector investment is a key determinant of future economic prosperity yet Canada today ranks near the bottom of virtually all leading industrialized economies on this measure.
EPAC, on behalf of its 150 member companies, who invest billions of dollars each year in Canada, employ tens of thousands of Canadians and deliver one fifth of the nation's oil and natural gas supplies, calls on the Federal Government to step up to show true leadership and deliver on its constitutional responsibilities.
They're calling upon the federal government to show true leadership and deliver on constitutional responsibilities, but how will they do this? The government talks about getting the pipeline done, yet has not indicated how it is intends to do so.
I believe that Mr. Dwight Newman has some good thoughts on the matter. Mr. Newman is a Munk senior fellow at the Macdonald-Laurier Institute, and a professor of law at the University of Saskatchewan. He has argued that the solution to the pipeline crisis is very simple. It is my hope that during our study, we can see if the methods that Mr. Newman recommends will be useful to our proposes. He said:
The logical, legal responses that create pipeline certainty are much simpler than many are assuming. They don't involve anything so exciting as launching a new Supreme Court reference, reviving the long-dead federal power to [disallow] provincial laws, or invoking the Emergencies Act to bring in the military.
They involve simply implementing appropriate federal legislation and/or regulations that take control of the situation.
Mr. Chair, to date we haven't seen any of that.
Getting this pipeline built is not a matter of the federal government coming up with an elaborate scheme but simply applying the law as it exists. Mr. Newman's recommendations could form the basis for an effective government response to this pipeline crisis. His solution is a simple bill to make it clear that the federal law will always trump provincial law in the matter of building pipelines.
If the federal government in the coming weeks passed through Parliament a bill designed to achieve more certainty on implementation of the decision to construct Trans Mountain, the resulting law would take priority over any provincial law that exists now or were adopted in future. British Columbia could talk about whatever it wanted, but any lingering legal uncertainty that British Columbia is playing with right now would be wiped out.
An Act to Facilitate Pipeline Construction could set out to entirely regulate all environmental matters related to pipelines in a manner that would make clear that no provincial laws operate in this context. It could even contain extra rules and powers related to sensible balances on protest activity in the vicinity of pipeline construction.
This is a simple solution to a problem that has become far greater than it needs to be. Leaving this crisis any longer is unacceptable. Mr. Chairman, this is an emergency. The future of our country depends upon the actions taken today. If the committee does not undertake this study, then there's a serious risk to not only our short-term economic output but also our mid-term levels of foreign investment and the long-term health of the Canadian federation.
I urge all members to vote in favour of this study. We must do it now before we run out of time. May 31 is only 30 days away. Therefore, with my Conservative colleagues, I would like to urge all members of this committee to adopt the motion for the good of this country.
I want to read the motion, and then I'll conclude, Mr. Chairman. The motion says, quite clearly:
That, pursuant to Standing Order 108(2), the Standing Committee on Natural Resources immediately undertake a study to find solutions to the obstacles facing the approved Trans Mountain Pipeline expansion; that the Committee consider factors such as the May 31st deadline issued by the proponent; the potential economic, socioeconomic, investment, and government revenue losses, and impacts on market access for Canadian oil, related to the potential cancelation, especially on Indigenous communities; municipal, provincial, and federal jurisdiction as it relates to the project; potential points of leverage between the federal and provincial governments, and potential fiscal, constitutional and legal solutions; that the first meeting take place no later than May 8th, 2018; that the witnesses include Kinder Morgan, Dr. Kevin Milligan, and Dwight Newman; that all meetings be televised where possible; and that the committee report its finding to the House.
I so move.
Thank you, Mr. Chair.
9:55 a.m.
Liberal
9:55 a.m.
Liberal
The Chair Liberal James Maloney
Thank you.
All in favour of Ms. Ng's motion....
Mr. Whelan, are you going to join us at the table, please?
9:55 a.m.
Liberal
The Chair Liberal James Maloney
Sure.
All in favour of Ms. Ng's motion, please indicate.
(Motion agreed to: yeas 5; nays 4)
We'll get back to regular committee business.
We'll suspend for a minute to get the witnesses ready to start their statements.
10 a.m.
Liberal
The Chair Liberal James Maloney
Thank you everybody. We're set to resume. We have two witnesses for the second segment of our morning.
From the Canadian Council on Renewable Electricity, we have Patrick Bateman and John Drexhage.
From IHS Markit, Mr. Kevin Birn is joining us by video conference.
The process is that each set of witnesses will be given up to 10 minutes to make a presentation, which you can do in either French or English or both. Following that, you'll be asked questions by members from around the table.
Gentlemen, since you're here, why don't we start off with you?
By the way, thank you for your patience. We're running a little bit behind.
10 a.m.
Patrick Bateman Director, Canadian Solar Industries Association, Canadian Council on Renewable Electricity
Mr. Chair, ladies and gentlemen members of the committee, good morning.
I would like to begin by thanking you for inviting us to testify before you today. My name is Patrick Bateman, and I am the director of Market Policy and Development at the Canadian Solar Industry Association, the CanSIA.
However, today I am representing the Canadian Council on Renewable Electricity, the CanCORE. This is a collaboration between the four key national professional associations involved in renewable electricity: solar energy, wind energy, marine energy and hydroelectricity. Together, our members account for 65% of all of Canada's current electricity production.
CanCORE's overarching goal is to ensure that Canada moves toward achieving our national non-emitting electricity target of 90% by 2030 and close to a 100% non-emitting electricity grid by 2050 to ensure that Canada meets our national climate action and clean growth objectives and our international obligations under the Paris Agreement.
As the rate of technological change increases and as our need to act more and faster on climate change increases, it is CanCORE's view that an enhanced government role for the collection, analysis, and dissemination of information about energy production, transmission, use, future trends, and associated greenhouse gas emissions is critical to support the decision-making of investors, policy-makers, regulators, utilities, and all electricity sector stakeholders moving forward.
There is currently a significant data and analytical gap for renewable and non-renewable electricity. There have been some notable contributions in recent years, including the National Energy Board's new annual electricity reports and NRCan's new clean energy map. However, there continues to be no Canadian data source that is as comprehensive as what we're seeing in other jurisdictions, and as a result, we are frequently relying on foreign sources for Canadian data.
Examples of data that would be valuable include granular renewable energy resource data; future electricity demand projections; supply mix considerations, including planned capacity additions and retirements and associated greenhouse gas emissions implications; the size, location, and operational attributes of existing and planned electricity generation facilities; sector-specific economic data, including labour force size, investment, and contribution to national GDP and to the local economies in which they are situated; and also historical and projected generation cost trends.
CanCORE views the Energy Information Administration and the National Renewable Energy Laboratory in the United States as good examples of best practices for Canada's study as we design and implement our national data strategy.
I look forward to any questions that you have.
Once again, thank you for inviting us to testify before the committee.
10:05 a.m.
Kevin Birn Director, Energy, IHS Markit
Thank you. Dear committee members, it's a pleasure and honour to be here today with you to discuss your important study into the state and future of Canadian energy data. My only apology is that I could not be there in person to join you.
I work at IHS Markit, an international data analytics and insight company. IHS Markit works with governments and industries around the world to help them make informed decisions. We service sectors across the economy, including finance, automotive, aerospace, defence, maritime, technology, geopolitical risk, and energy, which includes power, gas, renewables, oil, and climate change issues.
IHS Markit has a strong presence in the Canadian marketplace, with over 400 of my colleagues based here. Our two primary offices, located in the Toronto area, are focused on financial intermediary services and automotives, and our office in Calgary is focused on finance again, as well as energy.
I am based in Calgary, where I lead our western Canadian crude oil market research. We make extensive use of Canadian energy data and commodity data to deliver insight and analytics to our clients around the world. We also, through a unique service, make some of our oil sands research public.
My focus is on supply and demand fundamentals of Canadian oil and its role in the global oil market, which includes energy policy. It is from this perspective that I will share with you some thoughts that I hope you will find relevant to your study.
First, we believe considerable energy data does exist in Canada. However, it is often dispersed among federal and provincial governments, departments, ministries, agencies, and regulators. This complex web of sources can make it difficult to locate relevant data, to understand what data is available, and to interpret this data. This can lead to confusion and misinterpretation.
Having data is one thing; understanding and using data is another. Expertise is required to understand the data, appreciate any limitations, and identify any errors or gaps. Much of this expertise has been taken on by provincial governments, which collect different data for different purposes. This will likely always be the case, because provinces have their own interests in the data they collect. Some reasons include royalty purposes, regulatory processes, and environmental assessment and monitoring.
Some provincial data sets are very robust, such as the Alberta Energy Regulator, which makes much of the Canadian upstream industry data available. However, there are different priorities between regions. What one region collects, another might not, or it might not be presented in the same way, which can cause alignment issues between regions. These issues can generally be overcome, but they also complicate accessibility for the average Canadian.
Duplication of provincial data by the federal government may be counterproductive. This has the potential to lead to further alignment issues between series and/or confusion if multiple series exist.
As for the data itself, today, federally the key data sources we use in my shop are Statistics Canada and the National Energy Board. Provincial major sources of data are the Alberta Energy Regulator, the Government of Saskatchewan and the Government of British Columbia, and the Newfoundland offshore board. Over time, the availability of some of this federal data has declined, particularly around natural gas liquids, refined products, and interprovincial transfers.
It is also important to acknowledge that accessibility of some data has improved. For example, the National Energy Board has expanded its coverage and made accessible greater detail on crude-by-rail exports and pipeline exports as well.
Generally, the best way to view Canadian hydrocarbon data is that we have, through a network of various actors, a pretty good understanding of what is produced and what is exported. Where we see gaps is in what we consume as Canadians and how it comes and goes within Canada. Recognizing this patchwork of actors, there is a possible role for a national aggregator, one that recognizes the importance and the interests of the provincial governments in having expertise in collecting data sets and also in helping with alignment. Moreover, alignment can help identify future data needs and ensure consistent methods are established in other regions across Canada.
It's important to underscore that data gathering is only one factor. The other two important factors are expertise and accessibility. There is a need to understand the uses, limitations, errors, and gaps in the data. At the federal level, some of this expertise already exists with the National Energy Board, Natural Resources Canada, and Statistics Canada.
The last component is that the data needs to be accessible not only to researchers and academics but to the public. In this regard and others, the U.S. Energy Information Administration is often cited. Over time, the U.S. EIA has increased its customer services, developing analytical tools, providing interpretations of data, and developing user-friendly interfaces. The U.S. EIA also provides national and international energy outlooks and will respond to Congress to provide independent analysis on key questions, something that could be of value in our currently fractious energy and climate conversations.
Key to the U.S. EIA has been their administrator's ongoing pledge of impartiality. The currency of data and insight is credibility, and it is of utmost importance, because often data may not agree with one's opinions.
Part of the process of these sessions, as was provided by the clerk in the notes, was to make recommendations. I would like to take the opportunity to do so now, though I may have done so thus far indirectly.
First and foremost, I encourage you to seek out both the sitting and former U.S. EIA administrators. I have found them in the past to be an incredible wealth of knowledge, and they have incredible history and expertise.
Second, there is value in working with federal and provincial agencies to align data series, identify data gaps—and there are gaps—and interpret the data.
Third, the focus needs to consider or be broader than data itself. It needs to include considerations about the expertise required and for making data accessible.
Fourth, it needs to be impartial to ensure the data and its interpretations are credible.
I would like to thank you all for inviting me to speak today. This ends the portion of my prepared remarks.
10:10 a.m.
Liberal
The Chair Liberal James Maloney
Thank you very much, Mr. Birn.
Mr. Tan, you're going to start us off.
May 1st, 2018 / 10:10 a.m.
Liberal
Geng Tan Liberal Don Valley North, ON
Thank you, Chair.
Thank you, gentlemen, for being with us today. My first question goes to Mr. Bateman.
I think we can all agree that accurate energy data is required for effective policy decisions. The committee has already heard from some witnesses that Canada's energy data at both the national and the regional levels is often incomplete.
To address this data gap, some researchers or companies engage in different ways, such as computer modelling or mathematical or statistical analysis, or even by sending out a monthly press alert to collect the necessary information from industry or from other users.
How do you confirm that the data and information on electricity produced in renewable ways is complete and accurate and can meet our requirements without further worsening the gaps in our energy database?
10:10 a.m.
Director, Canadian Solar Industries Association, Canadian Council on Renewable Electricity
Mr. Tan, to confirm and to ask for a clarification of your question, was it how can we ensure that a federal role would achieve that?
